All Cash Can be All Bad: Why You Need a Mortgage

conventional mortgagesNo one wants to be in debt for THAT much money – but without a bank to hold you back, all cash buyers can end up in a serious pickle. Yes, you may be able to save some serious money, but if you end up buying a home that’s falling apart or paying more than it’s actually worth, is it really worth it? Here we’ll talk about why most buyers do better with mortgages, even if they have an 80% down payment. After all, a home is one of the most expensive purchases you’ll ever make, why make the wrong one?

Mortgages can be a Hassle

Let’s face it, mortgages can be a hassle. Trying to get one, even if you go the private mortgage route, is fraught with worry. You don’t know if they’re going to approve your application, you don’t know how much they’re willing to give you and you won’t know what the terms are until after the process is over with. Even worse, most people don’t get preapproved for a mortgage before they start looking for a home – leaving them in the lurch. We’ve said it once, we’ll say it again, the worst part of getting a mortgage is waiting too late to get a mortgage.

That Red Tape Protects You

When it comes down to it, all those approval processes that you have to go through actually protect you when it comes to buying a home. The house has to pass muster, it can’t be overvalued and it’ll have to go through an exhaustive provenance check to make sure that the person selling the home OWNS the home. It’s not uncommon for people to hold a title but not own a title – without title insurance and the title services that a mortgage company will run the home through, you may wind up with a big mess on your hands.

Cash Buyers Rarely Get Appraisals

Many cash buyers approach real estate as a “what you see is what you get” process – but this is rarely true. As Toronto mortgage brokers we’ve worked with many people that have tried to go all cash and run into problems later – don’t be one of these people! If you do have to buy with cash, make sure you get an appraisal.

There are many appraisal companies in the Toronto area that you can talk to, expect this to run anywhere from $200 to $1000, depending on the property. You’ll also want to make sure that you consult a title or real estate attorney to run a check on the title of the home; if there are taxes, liens or debts outstanding on the property when you buy it, you could inherit the debt.

Think Ahead

When it comes to buying property, even when you go all-cash, you need to think ahead. Banks are so finicky with who they do business with because they’ve had the bad experiences. Even if you’re thinking about going all-cash on buying your home, talk to one of our Toronto mortgage brokers first! We can show you how a large down payment can help you establish credit, save you money and help you make sure that the property you’re buying is on the up and up. Don’t get careless because you’ve got the cash to buy a home – know what you’re getting into before you buy.