What is Delayed Financing?
What is Delayed Financing?
Delayed financing is a powerful tool in a sellers market, and may make the difference between an offer on your dream home being accepted or declined. So what exactly is it, and how does it work?
Delayed financing is a buying strategy in which you purchase a home with cash, and then immediately obtain a cash-out refinance mortgage.
While there has typically been a 6-month waiting period required before a buyer is eligible to refinance, certain brokers (like Long Grove Mortgage) have the resources to get the process started within 24 hours of closing. Eligible borrowers may recover up to 80% of the purchase cost, and have the opportunity to lock in a desirable interest rate.
Potential Benefits
Competitive Edge
If you are making an offer on a desirable property, you are likely competing with other offers. A cash offer is more attractive to a seller and may help you edge out the competition.
Negotiating Power
A cash offer on a home can give you negotiating power. You may be able to get a better price.
Flexibility
Delayed financing can also quickly free up equity for other expenses or investments. You can invest the funds in a 401k, or apply it to home renovations. It might be a faster and smoother alternative to securing a renovation loan (like HomeStyle or an FHA 203K).
Basic requirements
Purchase must have been made within 6 months of refinance (measured from the date the property was purchased to the disbursement date of the new mortgage)
The cash used for the original purchase must be documented
The new loan size may not exceed the original purchase price
Title search must show that no liens exist on the home
Proof the home sale occurred (can be achieved by providing the original Closing Disclosure document)
The original purchase transaction was an arms-length transaction.
The buyer must be:
a natural person
an eligible inter vivos revocable trust, when the buyer is both the individual establishing the trust as well as the beneficiary of the trust.
an eligible land trust when the borrower is the beneficiary of the land trust
An LLC or partnership in which the buyer(s) have an individual or joint ownership of 100%
Eligible Properties
1–unit, 2–unit, 3–unit or 4–unit homes
Primary homes
Secondary homes
Vacation properties
Rental units
The Bottom Line
Delayed financing may be a powerful tool for you as you look to buy in a sellers’ market. It can also be a strategic option on a refinance. The best way to explore options is to consult with a local mortgage specialist. They can help you understand all your options and their various pros and cons specific to your unique situation. With an expert by your side, you’ll be set up to make a well informed and strategic financial decision.
Call us today to talk to a mortgage specialist.
847-634-2252
info@longgrovemortgage.com
NMLS #210846
