What is Delayed Financing?
Delayed financing is when a buyer pays for their home upfront with cash, and then immediately obtains a mortgage after the home is purchased.
What are its advantages?
The biggest advantage of delayed financing is the power of paying cash. A cash offer provides buyers with a competitive edge and allows them to stand out in a seller’s market, much like the one we find ourselves in today.
This method allows the buyer to make an enticing all-cash offer, then immediately puts the money right back into their pockets with a cash-out refinance.
What are the restrictions?
- The amount of the mortgage loan obtained cannot be greater than the amount of the purchase price, closing costs, prepaid fees, and points, combined.
- Applicants must have proof of cash purchase.
- Applicants must provide proof of the initial source of cash used for the purchase of the home.
- Applicants cannot apply for delayed financing with a home they purchased from someone they have a personal relationship with.
- If funds are provided from a third party, applicants must provide a gift letter.
- If applicants were provided a gift fund for the purchase of the home, they cannot give the cash from the cash-out refinance back to the donor.
- The property must be free from any liens.
To learn more about delayed financing and if it is right for you – contact a VanDyk Loan Originator today!