I recently helped clients who couldn't qualify for mortgage financing. Unfortunately, their application did not not qualify but only by a hair. The lender required that they pay off a personal loan in order to qualify. While they didn't have this amount of money available in their bank account, a cash back allowed them to pay off their debt and close their purchase transaction.
This is an excellent example of how a cash back can be the difference between qualifying for a mortgage and not qualifying. It's important, however, to consider the disadvantages as well.
A cash-back usually comes with a slightly higher interest rate and must be repaid in full if the mortgage contract is broken before the end of the term.
Watch the video below to learn more.
By: Sarah Colucci
Senior Mortgage Agent, Lic. M14000929