Posted May 14, 2014Tweet
In today's U.S. housing market, buyers who can close quickly on a home are often rewarded handsomely. Sometimes, they earn home price discount; or, they win preference over other higher-valued offers from buyers; or maybe the seller agrees to other unique concessions.
For buyers looking to close as quickly as possible on a home, and with cash to leverage at closing, there's a mortgage program to refinance your cash purchases just one-day post-closing.
Fannie Mae's Delayed Financing mortgage is available in all 50 states.
Fannie Mae's Delayed Financing mortgage program is nearly three years old.
Initially introduced in mid-2011, as the housing market recovered, it was meant to facilitate the sale of homes purchased at auction or on the courthouse steps, where buyers are typically given 24 hours or less to pay for a home -- either with cash or via a mortgage.
As most buyers have experienced, however, there are two giant hurdles in obtaining a mortgage in one day or less.
First, underwriting and approving a mortgage takes time. There are verifications and preparation which cannot be completed in a day. Furthermore, some states, including Maryland, enforce a mandatory 3-day waiting period between final document preparation and closing.
Closing in 24 hours is state-outlawed in Maryland.
The second big obstacle is that lenders require financed homes to be appraised, and free from defects. Homes sold at auction are often sold as-is, and appraisers typically need more than one day to complete a qualified review.
Via the Delayed Financing mortgage, buyers can sidestep these two issues.
Program guidelines allow a buyer to pay cash for a home, then immediately begin the refinance process to regain access the cash used at closing.
Prior to the Delayed Financing loan, buyers were required to wait six months prior to making a refinance of a straight cash purchase.
The Fannie Mae Delayed Financing program was meant to help home buyers -- specifically real estate investors -- purchase more homes, more rapidly, and to help move the housing market forward.
Under the program guidelines, buyers who use documented cash to purchase a home can refinance that cash via a cash-out refinance almost immediately. The standard six-month waiting period to refinance is waived.
In order to use the Delayed Financing program, buyers must show the following :
Additionally, buyers are required to prove that the transaction is a legitimate one. Collusion, subversion and "tricks" are prohibited, as are non-arms length transactions.
This means that buyers using Delayed Financing must prove that the home was purchased from an un-related seller including, but not limited to, parents, siblings, children, spouse, cousins, and grandparents.
Buyers are also prohibited from buying from persons with an interest in the transaction, which can include real estate agents, title agents, and appraisers.
Note that Delayed Financing is available to buyers of all types -- not just investors. Loans are available up to 70% loan-to-value, and can be used for a primary residence, a vacation home, or an investment property; and for residential homes of up to four units.
Furthermore, Delayed Financing is available to homeowners with more than four financed properties.
The Delayed Financing mortgage program is available in all 50 states. If you plan to pay cash for a home, then, be sure to pre-qualify prior to buying your home. Once you've paid cash, Delayed Financing is the only way to refinance within six months of your close.
Compare today's mortgage rates and see for what rates you qualify. Rates are available online at no cost, with no obligation, and with no social security number required to get started.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.