What Is Delayed Financing?


Delayed Financing: Cashout Refinance Mortgage

There are times when a home buyer or real estate investor will purchase a home with cash with the intention on doing a cashout refinance mortgage at a later time.  There are many reasons why a home buyer will purchase a home cash.  The home seller may prefer selling their property to a cash buyer with no mortgage contingency or the property may not qualify for a conforming loan due to repairs needed and/or the property not being habitable.  Many home buyers assumed that they can easily do a cashout refinance mortgage loan right after purchasing a home cash.  Unfortunately, due to the real estate, credit, and banking collapse of 2008, there are new rules and regulations when it comes to cashout refinance mortgage loans.  To do a cashout refinance mortgage with a conventional loan program, the mortgage loan borrower needs to wait six months.  However, there is an exception to this rule.  Fannie Mae will allow an exception for a mortgage loan borrower to do a cashout refinance mortgage loan under six months via the Delayed Financing mortgage loan program.  Home buyers can now purchase a home cash and do a cashout refinance mortgage loan the next day through the Delayed Financing mortgage loan program.

Fannie Mae Delayed Financing Guidelines

Foreclosures and REO properties often times need a lot of work and many foreclosures and REO properties are not habitable.  Unhabitable properties are difficult to get mortgage financing so home buyers and investors often times need to purchase it with cash or non traditional means such as hard money loans.  With the delayed financing mortgage loan program, a home buyer can purchase a home cash, make the home habitable or mortgageable, and do a cashout refinance mortgage loan prior to the six month mandatory traditional waiting period to do a cashout refinance mortgage loan.  Any qualified conventional mortgage loan borrower can do a delayed financing mortgage loan as soon as he or she closes on their home purchase.  The cash used for the home purchase needs to be documented and sourced.  The new mortgage loan cannot be greater than the actual purchase price of the subject property.  Rehab money invested in the subject property cannot be cashed out.  Only the original purchase price can.  The purchase transaction of the property needs to be an arms length transaction and cannot be a family member selling it to another family member.  Maximum loan to value on delayed financing cashout refinance mortgage loans are capped at 70% LTV.  Any residential properties up to 4 units will qualify.  Second homes and investment homes may also qualify for delayed financing mortgage loan programs.

Gustan Cho


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