Cash or mortgage for a Miami pre-construction condo?

On a Miami pre-construction condo, the deposits are paid from your own money either way; a mortgage, if you use one, arrives only at closing. So the real choice is how you fund the balance on delivery day. Paying cash is simpler and certain: no lender approval of the building, no appraisal condition, no rate risk. Financing keeps capital free, but most developer contracts carry no financing contingency, so if the loan fails, you still owe the balance.

Which suits you depends on how certain you need closing to be, and how much of your capital you want tied to one building for several years.

The deposit schedule. Developers stage deposits across the construction period, usually as percentages of the price triggered by events such as signing, groundbreaking and topping off, with the balance at closing. Four Seasons Private Residences Coconut Grove publishes 20 percent at contract and 20 percent at groundbreaking on its fact sheet. Fouquet's Miami stages deposits across contract, groundbreaking and top off, with the majority at closing. Banyan Tree Residences in West Palm Beach describes staged deposits at contract milestones with the majority due at closing.

Lenders do not usually fund these deposits. They are your cash, held in escrow, and a buyer planning to finance should treat them as money committed until delivery. Our page on the pre-construction deposit schedule explains how to read the triggers, and the Four Seasons Coconut Grove facts show one published schedule in full.

Usually not, and this is the clause that matters most to a buyer planning a mortgage. A financing contingency lets you cancel and recover your deposit if you cannot get a loan. Developer purchase agreements in Miami commonly leave it out, which means your obligation to close does not depend on a lender saying yes. If the loan falls through, the contract still requires the balance, and the deposits are at risk if you cannot pay it.

Read the closing and default clauses with your attorney before you sign, not before you close. Our page on what happens if you walk away covers the consequences, and the document list in what a pre-construction buyer should request shows where those clauses sit.

The lender looks at the building as well as at you. A new condominium has to pass the lender's own review of the project, and some features narrow the list of willing lenders.

A hotel in the tower is one. Waldorf Astoria Residences Miami, Delano Residences and Anantara Residences Miami each combine residences with hotel rooms or suites; some lenders treat such buildings differently. Short-stay rules are another. Cassia in Coral Gables offers flexible ownership with a minimum 3-day stay, and NoMad Residences Wynwood is described by its developer as short-term-rental-friendly. Buyers of those homes often value the rental flexibility; they should also ask lenders early whether that flexibility affects the loan.

Then there is the appraisal. At closing, the lender's appraiser values the home. If the value comes in below your contract price, the lender lends on the lower figure and you cover the difference in cash. Ask lenders before you sign, with the building's name and the documents in hand, not in the month of delivery.

Proof of where the money came from, and careful wires. The escrow agent and the title company will ask for source of funds documentation, and a purchase through an LLC or trust can bring identity reporting by the title company under federal rules; counsel confirms what applies. Verify every set of wire instructions by phone with a number you already have, never one from an email.

Cash buyers close on the developer's schedule without a lender's timetable, and there is no appraisal condition. Some later arrange a loan against the finished home; whether a lender will lend on that building is the same question as above. See source of funds documentation and LLC, trust or personal name.

Foreign national loans exist in Florida, usually with larger down payments and their own document lists, and some lenders lend without a US credit history. The deposit schedule is the same for everyone. Our pages on foreign national financing and buying without US credit history cover the details.

Cash suits the buyer who wants certainty of closing and the simplest file, and can leave the capital in one building. You give up liquidity while that capital sits in the building.

A mortgage suits the buyer who wants capital free for other uses and has confirmed early that lenders will finance the building. You give up certainty: the appraisal, the lender's review and the missing contingency all sit between you and the keys.

The desk asks the developer which lenders have already reviewed the project, and lays out the deposit schedule against your cash before you sign. Lending terms come from the lender, and tax questions go to your adviser. When delivery nears, our page on documents before closing lists what to collect.