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All Cash vs. Mortgage

Buying an apartment all cash is easier than buying with the help of a bank loan. Securing a mortgage adds another dimension to a purchase that a seller would like to avoid if there are competitive all cash offers on the table.

Why? Before a bank agrees to loan you a lump-sum of money, they’ll want to make sure you’re a credit worthy borrower. The bank will do a deep dive into your creditworthiness to make sure their loan will get repaid with no delinquencies.

Even if the bank has determined that you are a credit worthy borrower and the appraisal of the apartment has come back satisfactory, the overall make-up of the building can still keep the bank from agreeing to lend. This can range from too low of an owner occupancy rate to too many units being owned by one person.

These extra steps can slow down the negotiating process and ultimately disrupt a deal from going through.

LXW Tips

  • Shop different banks to see where you get the lowest mortgage rates.
  • If you’re financing, most sellers won’t review offers without a preapproval letter.
  • Ask your Real Estate Professional if you need a mortgage broker recommendation
  • The larger the down-payment, the lower your monthly interest expense
  • 30 year mortgage rates will be higher than 15 year mortgage rates because the bank is taking on more risk.

Mortgage Pre-Approval:

If you’ll be buying with a mortgage, the next step is to get pre- approval from a bank. Mortgage pre-approval signals to both your broker and the seller that you have the financial stability to secure a loan large enough for the purchase of the property. Getting mortgage pre-approval should be done before you go out looking at apartments with your Real Estate Specialist.

After finding a mortgage broker that you trust, you’ll go to the bank to fill out a pre-approval application and provide information regarding your income, assets and credit history. Your pre-approval letter will generally include a mortgage amount and an interest rate that will be valid for 60-90 days.

Monthly Mortgage Cheat Sheet

Your monthly mortgage payment will include both interest and principle payments. Use the below chart as a reference to see what your total monthly mortgage payment will be based on the size of your loan and the interest rate.

 

                

     MORTGAGE                                       

  

               15 YEAR MORTGAGE

30 YEAR MORTGAGE

3%

       3.50%

4%

4%

4.50%

         5%

  $400K

$2,762

$2,860

$2,959

$1,910

$2,027

$2,147

  $500K

$3,453

$3,574

$3,698

$2,387

$2,533

$2,684

  $600K

$4,143

$4,289

$4,438

$2,864

$3,040

$3,221

  $700K

$4,834

$5,004

$5,178

$3,342

$3,547

$3,758

  $800K

$5,525

$5,719

$5,918

$3,819

$4,053

$4,295

  $900K

$6,215

$6,434

$6,657

$4,297

$4,560

$4,831

  $1.0M

$6,906

$7,149

$7,397

$4,774

$5,067

$5,368

  $1.3M

$8,632

$8,936

$9,246

$5,968

$6,334

$6,710

  $1.5M

$10,359

$10,723

$11,095

$7,161

$7,600

$8,052

  $1.8M

$12,085

$12,510

$12,945

$8,355

$8,867

$9,394

  $2.0M

$13,812

$14,298

$14,794

$9,548

$10,134

$10,736

  $2.3M

$15,538

$16,085

$16,643

$10,742

$11,400

$12,078

  $2.5M

$17,265

$17,872

$18,492

$11,935

$12,667

$13,421

  $2.8M

$18,991

$19,659

$20,341

$13,129

$13,934

$14,763

  $3.0M

$20,717

$21,446

$22,191

$14,322

$15,201

$16,105

  $3.5M

$24,170

$25,021

$25,889

$16,710

$17,734

$18,789

  $4.0M

$27,623

$28,595

$29,588

$19,097

$20,267

$21,473

  $4.5M

$31,076

$32,170

$33,286

$21,484

$22,801

$24,157

  $5.0M

$34,529

$35,744

$36,984

$23,871

$25,334

$26,841