Refinancing after paying cash for your home

MortgagePorterHourGlassHouseThe greater Seattle – Bellevue competitive housing markets have been experiencing a higher amount of buyers paying “all cash” for homes. Refinancing after you’ve paid cash for a home is also referred to as “delayed financing”. Delayed financing may also take place when a person is buying a foreclosed home at auction at the court house. Historically, “all-cash” buyers who want to refinance after closing to re-coup the cash they used to purchase their homes had to wait six months after the purchase before they can do a “cash-out” refi. Now, home buyers who used “all-cash” to buy their home no longer have to wait months to refinance to get their cash back.

Here are some of the requirements to qualify for a cash-out refi without the six month wait period:

  • The purchase must be an “arms length” transaction (i.e. no affiliation or relationship between buyer and seller).
  • A copy of the HUD-1 Settlement Statement from the purchase must be provided showing there were no mortgages or financing used to purchase the property.
  • If funds were borrowed to purchase the property, those funds must be repaid and reflected on the HUD-1 Settlement Statement with the refi.
  • Title report must reflect the borrower as the owner of the property from the time of the cash purchase and also reveal no mortgages or liens.
  • The source of funds used to pay  cash for the property must be fully documented. (Bank statements, personal loan, HELOC funds on another home, etc.)
  • The new loan amount for the cash out refinance cannot exceed the sum of the original purchase price, closing costs and prepaids.
  • Loan amounts are subject to loan-to-value limits with conventional cash-out refinances.
  • Subject to conforming loan limits ($506,000 in King County in 2014 for a single family dwelling).
  • Available for primary or second home only (owner occupied).

If you are interested in refinancing or buying a home located anywhere in Washington state, I am happy to help you! Click here for a no-hassle rate quote.



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