The Rising Trend of All-Cash Purchases
In recent years, the real estate market has seen a significant increase in all-cash offers. According to the National Association of Home Builders, cash purchases accounted for 11.2% of all new home sales in Q4 2022, the highest since 1990. Moreover, the National Association of Realtors estimated that 28% of existing home transactions were all-cash sales in December 2022, an increase from previous months and years??.
Why Are Cash Offers Gaining Popularity?
- Market Dynamics: The trend towards all-cash offers, initially fueled by the pandemic-induced housing market frenzy, has sustained even as the market shows signs of cooling. This ongoing preference for cash offers can be attributed to a combination of factors, including the fluctuating real estate market conditions and the evolving preferences of buyers.
- Interest Rate Impact: The rising and fluctuating mortgage rates in 2023, particularly the average of 7.03% for a 30-year fixed-rate mortgage as of December 7, have significantly influenced buyer behavior in the real estate market. These higher interest rates make obtaining a mortgage more expensive, leading to increased monthly payments for homebuyers. As a result, individuals who have the means to make all-cash offers are finding themselves in a more advantageous position.
The Advantages of All-Cash Offers
- Seller Appeal: Cash offers provide certainty and speed, often making them more attractive to sellers.
- Negotiation Leverage: Buyers offering cash may find sellers more open to discounts, potentially saving money on the purchase.
Introducing NAF Cash
In response to these market trends, NAF Cash*, an affiliated company of New American Funding, offers a service designed to empower buyers with the benefits of buying in cash. Here’s how it works:
- Get Preapproved: Obtain preapproval through New American Funding.
- Make an All-Cash Offer: Use NAF Cash to make an all-cash offer on your new home.
- Immediate Purchase and Move-In: NAF Cash purchases the home, allowing you to move in right away.
- Flexibility in Selling Your Previous Home: If you have an existing home, you can sell it at your own pace.
- Complete the Mortgage Process: Finalize your mortgage with New American Funding.
- Official Purchase from NAF Cash: Use your new mortgage to buy your home from NAF Cash??.
Is an All-Cash Offer Right for You?
While the allure of owning a home free and clear is strong, it’s essential to consider your personal financial goals and circumstances. All-cash offers can help optimize tax deductions, enhance liquidity, allow for investment in other assets, and capitalize on borrowing capability when it's most affordable.
Programs like NAF Cash offer innovative solutions to navigate the market effectively. Whether you opt for an all-cash offer or a financed deal, it’s crucial to align your real estate decisions with your overall financial strategy.
*NAF Cash, LLC, an affiliated real estate company of New American Funding, will purchase subject property in cash and then sell it back to borrower. NAF Cash, LLC does not originate loans or issue loan commitments.