Is it a breach of sale contract if you included a mortgage contingent but then decided to close with all cash?
My wife and I are in the process of buying our first home in the US. We included an appraisal and mortgage contingency in the contract thinking we would go 50% down and 50% loan.
However, after consulting with the lender, the pre-approval letter had an error and the most they can lend is 20%.
If you decide to switch from mortgage to all cash in the middle of the process, would this be a breach of the contract and allow the seller to keep my earnest deposit if the deal falls apart?
- JudyLv 75 months ago
- SlumlordLv 75 months ago
No, so long as you go ahead and close on time then it won't be a problem. The seller may require you to prove you can afford to do this (provide proof of funds) but that's about all they could do.
- Anonymous5 months ago
It makes no difference to the buyer if their money comes as all cash from or a mixture of cash + mortgage financing. They don't get any more and they don't get any less.
- 5 months ago
No, it is not a breach of contract.
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- curtisports2Lv 75 months ago
Most sellers would be happy to have a deal changed to all-cash. The only scenario I see where a seller would raise an issue is if the contract stipulated that the seller was to pay fees, on behalf of the buyer, that were related to getting the mortgage. That money would be needlessly spent, and I can see a seller demanding reimbursement.
- 5 months ago
NO. A Sale Contract has NOTHING to do with how a buyer pays for the sale amount.
- realtor.sailorLv 75 months ago
No it's not a breach. It happens quite often.
- ArimatthewdaviesLv 75 months ago
Friend they're going to be very glad to get cash rather than to go through a mortgage company. Nobody is going to complain. But before you pay off that significant amount you better make darn sure that you have title insurance! And that the deed is free and clear.
- A HunchLv 75 months ago
A mortgage contingency means that you will buy the house as long as you get a mortgage for that amount. But since you don't need/want a mortgage it wouldn't matter as long as you still buy the house.
If you don't end up buying the house and you could have gotten a mortgage, than you would be in breach of contract.
- KyleLv 75 months ago
that would be something needed to be stated in the contract if it's an option. take it up with the bank or real estate company. wherever you got the mortgage from, see if it's an option. asking can't hurt.