If I make a cash offer for an REO, does that prevent me from getting financing from a bank prior to closing? Up until now I've always purchased with cash and then re-financed once my property is renovated and rented. But I'd like to avoid the extra closing costs this requires.
My plan is to offer cash for an REO, show my proof of funds, and then attempt to obtain financing before closing. If financing doesn't work out, I would close with cash.
Any flaws to this strategy? Thanks!
Here in Canada I've used this strategy: Make a cash offer, send POF and large EMD (often equivalent to the downpayment if financing) - to get the best terms/price, or, in the case of an REO, to be on the top of the heap. Simultaneously negotiate a mortgage with one of our lenders with the objective of having it in-place by Close.
A couple of times we've had to close with our own cash and then get the mortgage in-place. With the different seasoning requirements in the U.S.A., I do not know if you would be able to carry-on with the mortgage if you had to Close with your cash.
Thanks @Roy N. I hadn't considered the seasoning factor -- great point. I'm glad this strategy is working for brothers and sisters in the north!
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