Delayed financing - all cash offer then refi immediately?

General Real Estate Investing
2yFollow

Delayed financing - all cash offer then refi immediately?

Catherine Ding
New to Real Estate · Los Angeles · Member since 2022 · 43 posts · 41 votes

Hi BP!

Has anyone offered all cash then immediately refinanced to get the cash out? I am planning on doing all cash on an offer to make it more competitive and then getting a mortgage immediately after, but I was advised against doing this by a lender. He said that rates for cash out refi would be higher and you can only take out 80% of purchase price, not the ARV. I would be ok with only being able to take out up to 80% of purchase price, but I'm just worried about having to get a much higher interest rate. Anyone have any insights or experience with this? Thanks!

5Reply
112 views

Most Popular Reply

Dave MeyerPro Member
Head of Real Estate Investing at BiggerPockets · Seattle, WA · Member since 2015 · 355 posts · 829 votes
2y

Technically this isn't a refinance, right? Refinance means you're replacing an existing mortgage -- that isn't the scenario you're describing. The right lender should understand this. I'm about to do this and the quote I've received are about the same in terms of interest rate. 

Podcast Guest on Show #186
BiggerPockets
1Reply
See this reply in the discussion

30 Replies

Jump to latestLatest
  • Nolan Wilson
    Lender · Austin, TX · Member since 2023 · 6 posts · 0 votes
    2y
    Quote from @Catherine Ding:

    Hi BP!

    Has anyone offered all cash then immediately refinanced to get the cash out? I am planning on doing all cash on an offer to make it more competitive and then getting a mortgage immediately after, but I was advised against doing this by a lender. He said that rates for cash out refi would be higher and you can only take out 80% of purchase price, not the ARV. I would be ok with only being able to take out up to 80% of purchase price, but I'm just worried about having to get a much higher interest rate. Anyone have any insights or experience with this? Thanks!

     I have not heard of higher interest rates just because it is a delayed purchase. As long as the loan closes within 90 days it should be priced as a regular purchase.

    0Reply
  • Melvin ListBusiness Member
    Lender · Tampa, FL · Member since 2016 · 1k+ posts · 381 votes
    2y

    Yes it will be considered a cash out refinance so there will be additional loan level pricing adjustments that will increase your rate slightly.

    C2 Financial
    WebsiteView Page
    1Reply
  • Nolan Wilson
    Lender · Austin, TX · Member since 2023 · 6 posts · 0 votes
    2y
    Quote from @Melvin List:

    Yes it will be considered a cash out refinance so there will be additional loan level pricing adjustments that will increase you rate slightly.


     Ahh, thanks for that. Appreciate the insight 

    0Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    2y

    I know of a lender with no seasoning period. If owned less than 6 months, they'll offer 100% loan-to-cost. So the price you paid + rehab spent, as long as it doesn't exceed 75% LTV.


    However, they don't service CA.

    0Reply
  • Catherine Ding
    OP
    New to Real Estate · Los Angeles · Member since 2022 · 43 posts · 41 votes
    2y

    Thank you everyone for all your responses and feedback! It's been really helpful. We actually decided not to go through with this particular deal so won't be needing to do this anymore, but still helpful to know for the future

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free