Delayed Financing Guidelines

Delayed Financing Guidelines on Refinance Transactions

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will cover and discuss delayed financing guidelines on refinance transactions. Delayed Financing Guidelines apply for homebuyers who purchased home cash and are needing to do a cash-out refinance. Sellers often prefer cash home buyers. The housing market has been hot for the past few years. Bidding wars are often common. Cash buyers with no contingencies often get the winning bid in a home bidding war. Home prices have been rising throughout the United States. Due to rising home prices, both the FHFA and HUD have increased loan limits for the past six years. Conforming Loan Limits for 2022 are at $647,200. HUD increased FHA Loan Limits to $420,680 for 2022 due to increasing home prices. Another benefit of delayed financing today is that mortgage rates have been at a 2 year low.

Mortgage Rates Skyrocketing Like Never Before

Michael Gracz, an associate contributing editor and loan officer at Gustan Cho Associates is a mortgage market analyst. Mike Gracz is also an expert in mortgage rate analysis.
In this blog, we will discuss the Delayed Financing Guidelines. We will also discuss how cash-buyers can benefit from delayed financing. Delayed financing guidelines apply for homebuyers who purchase home cash in the past 6 months.

What Is Delayed Financing

Fannie Mae and Freddie Mac set up Delayed Financing Guidelines for home buyers buying property cash to be able to refinance a home in less than the 6 months waiting period required. Conventional loan delayed financing exception allows property owners to do a cash-out refinance prior to waiting the six months required. In 2011, Fannie Mae set up Delayed Financing Guidelines that enable home buyers who purchase property cash to reimburse themselves up to 100% of their home purchase costs with conventional loans.

Waiting Period on Delayed Financing on Conventional Loans 

Delayed Financing Guidelines on cash-out refinance mortgages apply for owner-occupant, second homes, and investment properties. Fannie Mae Guidelines on cash-out refinance mortgages require a six-month waiting period from the date of the initial home purchase. With Fannie Mae Delayed Financing Guidelines, the six-month waiting period requirement on cash-out refinance mortgages on conventional loans is waived. This holds true if the buyers did not open up any other loans since the home purchase. This is called the Delayed Financing Exception which means it is an exception to the cash-out refinance guidelines. If a home buyer has owned the property for six months or longer, Delayed Financing Exceptions do not apply.

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Qualifying For Delayed Financing

Delayed Financing Guidelines state that the home purchase transaction needs to have been an arms-length transaction. What this means is that the home buyer cannot be purchasing the home from a family member and/or have a non-arms-length home purchase transaction. The types of properties that qualify are owner-occupant primary homes, second homes, and investment properties. Certain trusts, Limited Liability Companies, and partnerships may qualify and be eligible. Property owners cannot have any liens by a lender such as a cash-out mortgage, HELOC, and/or other liens on the property. Proof that the property has no other liens needs to be provided. Lenders will run a nationwide third-party public record search to confirm. Documentation on how the home buyer purchased the home will be required.


Verified Funds Used For Buying The Home in Cash

Funds of the cash purchase need to be documented by legitimate sources such as the following:

  • Bank Statements and/or investment accounts
  • Personal verified funds that can be documented such as a bill of sale
  • HELOC and/or cash-out refinance mortgage from another property.

When using an unsecured loan or loan secured by another asset, restrictions may apply.


Freddie Mac Delayed Financing Guidelines

Being on a title for the past six months is required when it comes to cash-out refinance mortgage guidelines. There are exceptions to this rule:

  • The property was inherited
  • The property was legally awarded to the current property owner
  • No financing was used to acquire the property
  • The property needs to be lien-free
  • Original documents from home purchase closing

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Seasoning Versus Loan To Value

Seasoning Versus Loan To Value

The following rules apply:

  • Greater than 90 days 80% loan-to-cost
  • Greater than 90 days for the full appraised value
  • Have options with no seasoning requirements

For more information on Delayed Financing Guidelines, please stay tuned and read our daily blogs posted every day, 7 days a week, and on holidays. Try out the best mortgage calculator powered by Alex Carlucci of Gustan Cho Associates.


Delayed Financing Guidelines By FNMA On Refinancing

There are times when a home buyer or real estate investor will purchase a home with cash with the intention of doing a cash-out refinance mortgage at a later time. There are Delayed Financing Mortgage Guidelines these types of home buyers need to abide by. There are many reasons why a home buyer will purchase a home in cash. The home seller may prefer selling their property to a cash buyer with no mortgage contingency where it is a hot property. Or the property may not qualify for a conforming loan due to repairs needed and/or the property not being habitable. Sellers may only take a fast closing purchase offer. In this article, we will discuss and cover Delayed Financing Mortgage Guidelines By FNMA On Refinancing.

Cash-Out Refinancing Waiting Period Guidelines

Many homebuyers assumed that they can easily do a cash-out refinance mortgage loan right after purchasing home cash. Unfortunately, due to the real estate, credit, and banking collapse of 2008, there are new rules and regulations when it comes to cash-out refinance mortgage loans. New Delayed Financing Guidelines were implemented. To do a cash-out refinance mortgage with a conventional loan program, borrowers need to wait six months. However, there is an exception to this rule. Fannie Mae will allow an exception to do a cash-out refinance mortgage loan under six months via Delayed Financing Guidelines. Homebuyers can now purchase home cash and do a cash-out refinance mortgage loan the next day through the Delayed Financing mortgage loan program.

Fannie Mae Delayed Financing Guidelines

Foreclosures and REO properties oftentimes need a lot of work. Often times foreclosures and REO properties are not habitable and need renovations. Unhabitable properties are difficult to get mortgage financing. Homebuyers and investors oftentimes 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 in cash. Make the home habitable or mortgageable. Do a cash-out refinance mortgage loan prior to the six months mandatory traditional waiting period to do a cash-out refinance.

Delayed Financing Guidelines on Refinancing Home After Buying Cash

Any qualified 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 cash-out refinance mortgage loans are capped at 70% LTV. Any residential properties with up to 4 units will qualify. Second homes and investment homes may also qualify for delayed financing mortgage loan programs.

Qualifying For Mortgage With A Mortgage Company Licensed in 48 States Who Are Experts on Delayed Financing Guidelines 

Home Buyers who need to qualify for a mortgage with a national mortgage company with no mortgage overlays can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at Gustan Cho Associates has zero overlays on FHA, VA, USDA, and Conventional loans. Gustan Cho Associates is licensed in 48 states with over 160 wholesale mortgage lenders. We have dozens of wholesale non-QM loans and bank statement mortgage lenders for self-employed borrowers. Our support and licensed personnel are available 7 days a week, on evenings, weekends, and holidays.

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