Is it a breach of sale contract if you included a mortgage contingent but then decided to close with all cash?

Update:

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?

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  • Judy
    Lv 7
    6 months ago

    no...................................................................

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  • 6 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.

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  • Anonymous
    6 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.

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  • 6 months ago

    No, it is not a breach of contract.

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  • 6 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.

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  • 6 months ago

    NO. A Sale Contract has NOTHING to do with how a buyer pays for the sale amount.

    • Nuff Sed
      Lv 7
      6 months agoReport

      Actually, a sale contract FREQUENTLY includes specific terms for payment.

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  • 6 months ago

    No it's not a breach. It happens quite often.

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  • Anonymous
    6 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 Hunch
      Lv 7
      6 months agoReport

      The seller always gets cash - either from the lender or from the buyer. As long as the buyer closes, the seller doesn't care where the cash comes from.

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  • 6 months ago

    No.

    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.

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  • Kyle
    Lv 7
    6 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.

    • Nuff Sed
      Lv 7
      6 months agoReport

      So, you would need to SAY there is an "option" to give them the purchase money in cash versus, say, a certified check or wire transfer? What difference would it make to the seller?

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