Re:Investors bought a record share of U.S. homes in 2021
by tempnow987 on Thursday February 17, 2022 @03:33PM
(#30378286)
Because with cash you have the money to actually make the deal happen. With a mortgage you depend on a bank giving you the money.
A bank says they will lend 75% LTV, you are preapproved for a $2M house, so will bring $500K to the table and bank will provide $1.5M you think.
But wait, the appraisal comes back for $1.6M instead of the $2M you bid. Bank says no problem, we will lend 75% LTV or $1.2M. Now you have to find (within days) $300K. And you can't borrow it because that will mess up underwriting on your current loan.
Or you buy a car before closing. Whamo - your DTI is toast.
Or you have someone open a CC in your name. Whamo - no closing.
A bank says they will lend 75% LTV, you are preapproved for a $2M house, so will bring $500K to the table and bank will provide $1.5M you think.
But wait, the appraisal comes back for $1.6M instead of the $2M you bid. Bank says no problem, we will lend 75% LTV or $1.2M. Now you have to find (within days) $300K. And you can't borrow it because that will mess up underwriting on your current loan.
Or you buy a car before closing. Whamo - your DTI is toast.
Or you have someone open a CC in your name. Whamo - no closing.