THE MORTGAGE BROTHERS SHOW
Delayed Financing – how to get cashout without waiting 6 months seasoning?
What is a “Delayed Financing” (vs delayed financing)?
- Delayed Financing (Defined Term) has more to do with avoiding normal Seasoning Requirements (6 months) when doing a Cash-Out Refi then really anything else. It could be called “No Seasoning Cash-Out Refinancing”. Basically Someone delays getting financing by first paying cash (or can be from a HELOC, or secure loan) and THEN decides to put financing on the property after COE but doesn’t want to wait the standard 6 months seasoning!
2 scenarios could happen-
- Not realizing it Ahead-of-Time: Use your own cash to buy and then you decide to replenish cash and don’t want to wait the std 6 months seasoning requirement for CashOut.
- Planning Ahead-of-Time: same concept above
Why would someone ever want to do Delayed Financing (what is the benefit)?
- Avoid Seasoning Requirement for Cash-Out Refi
- Want quick COE and save time by paying cash
- Better negotiating position by offering to pay cash
- Follow standard Cash-Out LTV & Cash-Out Interest Rates
- New Appraisal Required
- Money replenishes where money came from
Example for Delayed Financing
- Bought Home For: $200,000
- CCs/PPs: $5,000
- Max Loan: $205,000
- New Appraised Value = $230,000 x .80% LTV (for Primary) = $184,000 Max Loan
- Like having put an original 8% down-payment
Alternate way to do delayed financing”. Example – Parent buying a home for child with cash and then child does R/T refinance to cashout parent. Requirements:
- Parent would have to have basic standard loan with child (deed of trust etc…title company can really help) and then child would do normal R/T Refinance to pay Parent off
- R/T Refinancing LTV and Interest Rate % would apply
- New Appraisal would be required