In today’s competitive housing market, we are seeing more buyers using “all cash” to purchase their homes. Delayed financing allows home buyers who pay cash for a home to obtain cash out, using a refinance, without it being treated as a “cash out” refi. A “cash-out” refi has stricter requirements, including having to wait 6 months after closing before being able to refi. Delayed financing allows home owners to recoup the cash used to purchase the home.
Here are some requirements to qualify for a “delayed financing” refinance:
- The property must have been purchased in the last six months. The six month time period is measured from the purchase date of the property to the closing date of the refi. If refi’s are taking 30 to 45 days, you need to factor that time into the “six month time period” so it’s important to start the refi process asap.
- There may be no affiliation or relationship between the seller and the buyer of the property at time of purchase.
- HUD-1 Settlement Statement required from the original purchase confirming the transaction was a “all cash” transaction. A recorded trustee’s deed may be used in the event a HUD-1 is not available.
- Title report must confirm that there are no liens (mortgages) on the property and that the borrower is the owner of the property.
- Source of funds for the all cash purchase must be sourced or documented.
- If funds were borrowed to purchase the property (such as using a HELOC on another property), those funds must be repaid and disclosed on the HUD-1 for the refi. NOTE: Gift funds used to purchase the property cannot be reimbursed from the proceeds of the refi.
- The loan amount for the new mortgage cannot be more than what the cash the borrower used to purchase the property plus closing cost on the new mortgage.
- The new loan amount is subject to loan-to-value requirements for a refi.
- Subject to current conforming loan loan limits (including conforming high balance).
If you paid all cash for a home in the last few months, delayed financing could be a great opportunity to get some of your cash back at today’s very low interest rates.
If I can help you with your refi or purchase of a home located anywhere in Washington state, please contact me.