Buying Home Cash And Doing A Cash-Out Refinance Mortgage

Cash buyers are the home buyers of choice for any home seller and home seller’s realtors.  Cash buyers normally can get the winning bid on a property with multiple offers and home sellers normally will take a lower offer on a multi-offer to a cash buyer.  Most home buyers do not want to tie up their cash on a home purchase, however, many home buyers do have the means of pulling the cash together to purchase a home cash but want to do a cash-out refinance mortgage right after their home purchase.

Many home buyers just assume that if they purchase a home with cash that they can turn around and do a cash-out refinance mortgage the next day.  They often borrow money from family, relatives, or close friends and tell them to borrow them the money and they will pay them back right after they close by doing a cash-out refinance mortgage.  Unfortunately, after the major 2008 real estate market collapse, cash-out refinance mortgage financing rules and regulations have changed.  There are strict rules with regards doing a cash-out refinance mortgage after a home purchase.  There are mandatory waiting periods to do a refinance mortgage, for both Conventional mortgage loan programs and FHA mortgage loan programs.

FHA Loan Refinance Mortgage

FHA loan programs has a 6 month waiting period for a rate and term refinance mortgage and the maximum loan to value on a FHA refinance mortgage is 97.75% LTV.  To do a cash-out FHA Loan refinance mortgage, there is a 12 month waiting period and the maximum cash-out loan to value on a FHA loan refinance mortgage is capped at 85% LTV.  The property cannot be listed on the market on any refinance mortgage loans.

Conventional Loan Refinance Mortgage

To do a rate and term as well as a  cash-out refinance mortgage loan, there is a six month waiting period after a home purchase.  The maximum loan to value on a conventional cash-out refinance mortgage loan is 80% loan to value.  Two appraisals may be required depending on the conventional mortgage lender.

Fannie Mae Delayed Financing Mortgage Program: No Waiting Period For Cash-Out Refinance

Under Fannie Mae’s Delayed Financing mortgage program, there is no waiting period to do a cash-out refinance mortgage.  A homeowner can do a cash-out refinance mortgage the next day after they close the home cash.  There are terms with Delayed Financing.  Maximum cash-out on refinance mortgage with the Delayed Financing program is 70% and the loan amount cannot be greater than the actual purchase price.  For example, if you purchased a home for $200,000 cash and you want to do a cash-out refinance mortgage under the delayed financing program, the maximum mortgage loan amount you can get is $140,000.  If you purchased the home for $100,000 and did $100,000 worth of renovations to the home and the home is appraised at $200,000, the maximum you can get a cash-out refinance mortgage loan for is $100,000 and not $140,000 because the mortgage loan amount cannot be greater than the purchase price, which on this case is $100,000.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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