Delayed Financing (Paying Cash & Refinancing After Close)

By Jay Voorhees

May 31, 2019 2 min read

With so many cash-rich buyers in our California and Texas markets, we want to remind everyone that “Delayed Financing” is sometimes a great option for buyers.

Delayed Financing is a conventional financing provision that allows “all-cash” buyers to immediately do a cash-out refinance after an all-cash purchase closes.

The advantage for buyers of course is that they can make far more competitive all-cash offers and then still take advantage of very low-rate mortgage financing after close.

There are two caveats: (1) the cash for the all-cash purchase must come solely from the borrower’s own funds (no loans of gifts); and (2) the Delayed Financing must close within 180 days of close of escrow.

If buyers use “gift funds” for an all-cash purchase, they have to wait 180 days before they can refinance.

In addition, buyers should know that delayed financing transactions are subject to “cash-out” guidelines, with slightly higher interest rates and loan-to-value ratios typically limited to 75%.

Delayed Financing Is Subject To Cash-Out Guidelines

A cash-out loan is the refinancing of an existing mortgage into a larger mortgage that not only changes the interest rate and the terms of the loan, but also advances cash to you. You can use the cash-out for anything of course, including home improvements, tuition, and debt consolidations.

Loan-to-value restrictions and credit standards are tighter for cash-out loans and interest rates are usually higher. You also need to make sure you have sufficient equity to meet cash-out guidelines, but our experts are happy to assist with this determination with our free home valuation estimates.

Questions?

JVM Lending prides itself on having a super team with a unique “No Loan Officer Model.” You can view our daily quoted rates and scenarios posted here. If you have questions about the purchase process, you can also view our Purchase Process Overview here. We know how big of a milestone it is to purchase a home and our Super Team of Mortgage Analysts is available to help guide you through the process every step of the way.

You can contact JVM Lending’s team if you have any questions about property types, mortgage interest rates, or getting pre-approved for a home loan. Our team is available 7 days a week and guarantees 60-minute response times to inquiries via phone at 855-855-4491 or via email at jvmteam@jvmlending.com.