Nov 19, 2014
Good news for cash homebuyers wanting to get their cash back shortly after purchasing a home. You can get a cash-out refinance almost immediately, thanks to a little known Fannie Mae program. The delayed financing program allows all-cash homebuyers to refinance and take equity out as soon as they close on the home purchase.
That’s good news for homebuyers in all-cash purchases, many of which are investors or baby boomers trading down to more manageable homes. The delayed financing program gives them the option to take home even more cash while enjoying historically low interest rates on a conventional home loan.
The program comes with rules such as the sale must have been “arm’s length” (no parents selling to children), the owner can’t have more than 10 financed properties and there can’t be any other liens against the property. Why would a homeowner use the delayed financing program instead of waiting the six months to tap equity?
- A property may be in such disrepair that a lender won’t underwrite it. With this program, a homebuyer can buy the property, make quick repairs and take money out of it before six months elapse.
- The chain of buyers and sellers might have irreconcilable timing issues.
- It can be used as a tactical advantage in a hot market. Many sellers would rather accept cash offers over those with a financing contingency, sometimes even when the cash offer is lower. The program allows homebuyers to present a cash offer, then replenish their liquidity once the deal is done.
Source: Mortgage Daily