Cash Vs Credit Card On Home Purchase

[RetiredGypsy]

Except for a good faith deposit, I'm having a hard time finding out who all demands straight cash payments in all the hands that reach into the pot for closing costs on a house.

I would much rather be paying with one of my cards that has 0% for a year or two, and stick all that cash into investments. I'm greedy like that.

So when you bought your home, did you cut everyone a check? Did the banks or inspectors or county tax whoevers, whoever all was involved, what payment methods did you use to lighten your wallet?

 

[Scuba]

Common practice is to wire cash to escrow company. They usually don't want personal checks and I've never had any escrow company willing to take a credit card. If they did, I'm sure they would pass the cost on to the person using the card. Mortgage companies don't accept credit cards for payments either, for the same reason. Landlords generally don't take cards for rent.

 

[Aggie1999]

Most title companies will also take a cashier's check at the time of closing. This can save you any wire transfer fees charged by your bank. Also, I never liked the idea of wiring a title company money before closing has happened.

Note: The above is only my experience when purchasing a house with cash. No clue how a loan might change things.

 

[calmloki]

What Scuba said. escrow companies aren't too hot on cash either.

Cashier's checks are doable I think, but add some time to closing as the escrow company makes sure it isn't a bogus check drawn on Bank of Booshwah.

 

[W2R]

Except for a good faith deposit, I'm having a hard time finding out who all demands straight cash payments in all the hands that reach into the pot for closing costs on a house.

I would much rather be paying with one of my cards that has 0% for a year or two, and stick all that cash into investments. I'm greedy like that.

So when you bought your home, did you cut everyone a check? Did the banks or inspectors or county tax whoevers, whoever all was involved, what payment methods did you use to lighten your wallet?

When I bought my house in cash, the title company totalled up how much I needed to bring according to the settlement papers, and told me to bring it to closing, in the form of a certified check made out to them. Their lawyers took care of all the closing details, and at closing the title company paid everyone what they were owed so that it was a done deal, finished and closed. Which is the whole point of closing, as I understand it.

Here in Louisiana, this is part of what title companies do. Did you decide to be your own title company? If so, well, good luck and I am sure you know what you want to do.

 

[Freedom56]

You normally have to wire the settlement amount to the escrow company. My last purchase was in 2011 in Florida. It was an all cash transaction. They required $10K wired to the escrow company upon acceptance of the offer. One week before closing they provided a detail of the balance and closing costs (fees and pro-rated taxes) which I wired 24 hours before the closing. Since it was an all cash transaction, my closing costs were only $173. I have never heard of any escrow company accepting credit cards. All cash transactions can save the buyer thousands.

 

[meierlde]

You normally have to wire the settlement amount to the escrow company. My last purchase was in 2011 in Florida. It was an all cash transaction. They required $10K wired to the escrow company upon acceptance of the offer. One week before closing they provided a detail of the balance and closing costs (fees and pro-rated taxes) which I wired 24 hours before the closing. Since it was an all cash transaction, my closing costs were only $173. I have never heard of any escrow company accepting credit cards. All cash transactions can save the buyer thousands.

Did that include the price of the owners title policy? This of course is one of the items in closing costs, and protects the owner if the title is defective or if fences don't conform to property lines etc.

 

[Freedom56]

Did that include the price of the owners title policy? This of course is one of the items in closing costs, and protects the owner if the title is defective or if fences don't conform to property lines etc.

That is paid by the seller in Palm Beach County. Below is the difference between a cash transaction and a mortgage transaction.

CLOSING COSTS FOR A CASH TRANSACTION

Buyer Closing Costs:
Settlement Fee

Seller Closing Costs:

Settlement Fee
Owner’s Title Insurance
Abstract/Title Search
Estoppel Fee (if required)
Lien Search

CLOSING COSTS FOR A MORTGAGE TRANSACTION

Buyer Closing Costs:
Mortgagee Title Policy
Endorsements:FF9—10% of both policies Each additional—per lender’s agreement
Settlement/Closing Fee

Seller Closing Costs:
Settlement Fee
Owner’s Title Policy Promulgated rate
Abstract/Title Search
Estoppel Fee (if required)
Lien Search

I did my homework before wiring the final settlement funds so I wouldn't get ripped off. Cash is king when it comes to real estate transactions. For that matter cash is also king when buying cars.

 

[rayvt]

Cash is king when it comes to real estate transactions. For that matter cash is also king when buying cars.

I keep hearing this, but I don't see how it could possibly be true. Except maybe in real estate for sellers who have an urgent need to sell TODAY---like maybe his bookie was coming over tonight with a baseball bat to collect on a large outstanding bet.

Because in a normal RE transaction, the seller gets cash and doesn't care whether the cash came from the buyer's bank account or the buyer's mortgage lender.

Just who is the seller who will drop $5,000 off the price just because the buyer has a certified check? Perhaps a desperate seller who needs a quick closing, but that's it.


As for cars, I don't believe that either. Same reason. Except maybe for the "buy here, pay here" used car dealers. My last three new car purchases were all at or below invoice and we didn't even bring out checkbook, the entire cost was financed (even the tax & title fee).

Probably not even a private-party used car purchase. We did sell one car for literal cash, but I sure didn't give him any break on the price, we looked up the Kelly Blue Book value and that was the price. He paid in $100 bills counted out on the dashboard.

 

[Freedom56]

I keep hearing this, but I don't see how it could possibly be true. Except maybe in real estate for sellers who have an urgent need to sell TODAY---like maybe his bookie was coming over tonight with a baseball bat to collect on a large outstanding bet.

Because in a normal RE transaction, the seller gets cash and doesn't care whether the cash came from the buyer's bank account or the buyer's mortgage lender.

Just who is the seller who will drop $5,000 off the price just because the buyer has a certified check? Perhaps a desperate seller who needs a quick closing, but that's it.


As for cars, I don't believe that either. Same reason. Except maybe for the "buy here, pay here" used car dealers. My last three new car purchases were all at or below invoice and we didn't even bring out checkbook, the entire cost was financed (even the tax & title fee).

Probably not even a private-party used car purchase. We did sell one car for literal cash, but I sure didn't give him any break on the price, we looked up the Kelly Blue Book value and that was the price. He paid in $100 bills counted out on the dashboard.

When we bought our condo in Florida in 2011, 92% of all real estate transactions were all cash in Palm Beach County. If you did not have cash, banks were not interested. We had to provide proof of 100% of funds in an account with our offer and again prior to acceptance of our offer. This is how short sales worked back then. I beat out 6 other higher offers that had financing contingencies. Our accepted offer was 22% of the price the developer sold this condo for in late 2007. If we didn't have the cash, we wouldn't have this property. Plus we saved thousands on closing. Fast forward 6 years, my condo is now worth 3 1/2 times what we paid for it. So cash is king.

As for cars, I pre-negotiate my price with the dealers internet sales person to avoid the nonsense and games dealers play. My out the door price is significantly lower than anyone financing (about 19% lower). Most people who finance cars don't understand what they are realy paying for with interest and hidden fees. A car is a depreciating asset. I buy new and keep them until they become a maintenance burden (nowdays about 15 -18 years).

 

[RunningBum]

I keep hearing this, but I don't see how it could possibly be true. Except maybe in real estate for sellers who have an urgent need to sell TODAY---like maybe his bookie was coming over tonight with a baseball bat to collect on a large outstanding bet.

Because in a normal RE transaction, the seller gets cash and doesn't care whether the cash came from the buyer's bank account or the buyer's mortgage lender.

Just who is the seller who will drop $5,000 off the price just because the buyer has a certified check? Perhaps a desperate seller who needs a quick closing, but that's it.


As for cars, I don't believe that either. Same reason. Except maybe for the "buy here, pay here" used car dealers. My last three new car purchases were all at or below invoice and we didn't even bring out checkbook, the entire cost was financed (even the tax & title fee).

Probably not even a private-party used car purchase. We did sell one car for literal cash, but I sure didn't give him any break on the price, we looked up the Kelly Blue Book value and that was the price. He paid in $100 bills counted out on the dashboard.

A seller doesn't want to take a house off the market only to find out the buyer's financing fell through. That's why cash offers are usually more attractive. I suppose pre-approved financing is close or maybe the same.

I think car dealers sometimes make money on the financing so I don't know that cash is an advantage, or perhaps even a disadvantage.

 

[braumeister]

I've bought six homes in five different states. Every time, the title company gave me a number and asked me to bring a certified check for that amount to the closing.

Three of those times, there was a small difference in the amount for one reason or another, and they were happy to accept a personal check for the difference.

I can't imagine ever being able to use a credit card for those sorts of payments.

 

[meierlde]

That is paid by the seller in Palm Beach County. Below is the difference between a cash transaction and a mortgage transaction.

CLOSING COSTS FOR A CASH TRANSACTION

Buyer Closing Costs:
Settlement Fee

Seller Closing Costs:

Settlement Fee
Owner’s Title Insurance
Abstract/Title Search
Estoppel Fee (if required)
Lien Search

CLOSING COSTS FOR A MORTGAGE TRANSACTION

Buyer Closing Costs:
Mortgagee Title Policy
Endorsements:FF9—10% of both policies Each additional—per lender’s agreement
Settlement/Closing Fee

Seller Closing Costs:
Settlement Fee
Owner’s Title Policy Promulgated rate
Abstract/Title Search
Estoppel Fee (if required)
Lien Search

I did my homework before wiring the final settlement funds so I wouldn't get ripped off. Cash is king when it comes to real estate transactions. For that matter cash is also king when buying cars.

Not exactly closing costs as such but buyers with a mortgage typically have to do escrow for taxes and insurance so 120 of the annual premium for insurance and some number of months for taxes. The seller will have prorated taxes taken out of the settlement. Also not direct closing costs are the realtor's fee.