Posted September 2, 2014Tweet
Did you know that you can refinance to get your "cash back" just one day after an all-cash home purchase?
With 29% of all home sales occurring as all-cash transactions, the cash-out, one-day-after-closing refinance is increasingly popular with today's home buyers. The program is known as "Delayed Financing" and it's available in all 50 states.
With current mortgage rates at a 15-month low, paying cash for home can get you a great deal on a property, plus cheap financing after your closing's complete.
Most Delayed Financing loans close in 30 days or fewer.
Fannie Mae's Delayed Financing mortgage program isn't new.
Initially introduced in mid-2011, Delayed Financing 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 know, you can't get a mortgage in one day or less. 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.
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.
With Delayed Financing, buyers can sidestep both of these issues.
Program guidelines allow a buyer to pay cash for a home, then begin the refinance process the very next day in order to extract the cash used to pay for the home.
Prior to Delayed Financing, mortgage lenders required buyers to wait six months after a purchase before making a refinance loan application. Mortgage rates for a Delayed Financing mortgage are the same as for any cash out refinance loan.
If you've ever wanted a mortgage for property bought at auction, or decided that paying for a home wasn't the best use of your funds, Delayed Financing is for you.
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 a home 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.
Because non-arms length transactions are disallowed, buyers using Delayed Financing must prove that the home was purchased from an un-related seller which includes, but is not limited to, parents, siblings, children, a spouse, cousins, and grandparents.
Buyers using Delayed Financing are also prohibited from buying a home from persons with an interest in the transaction, which can include real estate agents, title agents, and appraisers.
You don't have to be a real estate investor to use Delayed Financing, either. The program is available to home buyers of all types -- investors, first-timers, auction block hunters, and repeat buyers.
Mortgage loans are available up to 70% of the home's purchase price, and can be used on 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.
When you pay cash for a home at auction, Delayed Financing is the only way to refinance your cash-out one-day after closing. It's also the only refinance loan available to buyers paying cash to get a "great deal".
Get today's Delayed Financing loan mortgage rates. Rates are available online at no cost, with no social security number required to get started, and with no obligation to proceed.
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.