One of the most difficult aspects to becoming a home buyer is making the choice between a cash home and a home equity loan. Cash home buyers are those who have saved up enough in order to purchase a home on the property that they wish to buy and usually use a third party lender to accomplish this. These home buyers must know all of the specifics of their mortgage, as well as the amount of money that they can borrow from their bank or credit union. Many people who make this decision do so because they wish to own their home, but do not necessarily want to deal with ongoing payments like an equity loan would. Cash home buyers are typically individuals who are in the middle of a financial crisis and need additional money in order to make ends meet. If you are looking for more tips, check out Tampa Cash for Houses
On the flip side, an equity loan is another home buyer option, which is actually a refinance of the home. This loan is similar to a conventional mortgage loan, where the buyer, instead of borrowing money from a third party source, borrows money directly from the mortgagee. Once the money is paid back, the mortgagee will then take the equity that was borrowed and payback the buyer with one lump sum payment. This lump sum payment, of course, will be significantly lower than what the buyer originally paid towards the home. It is for this reason that many home equity loans are paid off within just five years, while the rate of return on a cash home loan is closer to eight percent, and therefore allows for a larger lump sum payment each month.
Both home loans and home purchases have their positives and negatives. The choice to go with either option should be made based on the particular needs of the individual home buyer. Although interest rates on both types of loans are slightly higher than the national average, cash homebuyers tend to purchase at closing more quickly, while home equity loans often have fixed interest rates that do not fluctuate, making them more favorable for long term use.