Delayed Financing Closing Costs?

Question

I am pursing the BRRRR methods and delayed financing looks like a better option than cash back refinance. So that I can properly estimate my costs and fees. What are the typical closing costs when you do delayed financing?

Chris Mason · Answer

Delayed financing is a cash out refinance. No difference in closing costs.

Nick Belsky · Answer

@Corbett Brasington

Costs are the same.

Be very aware of the differences between LTC and LTV cash out refinance loans. Some lenders won't let you Cash Out of a Short Term HML based on LTV unless you've owned the property for 12-months. Most are 6-months, but I've ran into 3 lenders lately that recently changed their investors and this guideline changed.

Delayed financing is essentially a cash out refi but you have from day 1 up to 180 to fund the refinance. You are normally limited to cashing out 100% of the cash you initially invested in the purchase only (no rehab costs!) or an LTV max... whichever is lower.

Delayed financing is a great option for many investors. Just make sure you are fully aware of the limitation of it.

Cheers!

Eric Veronica · Answer

As @Chris Mason stated the closing costs should be the same. Interest rates should also be the same.

A conventional cash out refinance requires you to be in title for 6 months. The delayed financing exception allows you to apply for a cash out refinance with less than 6 months seasoning. No difference in rates/fees.

Tyler McDonald · Answer

@Corbett Brasington thanks for asking the question. I'm in a similar boat and it seems like delayed financing closing costs are the same as a cash out. My biggest problem was finding a lender who even know what delayed financing was. Once I did it really doesn't seem any different than a cash out except that you can only pull out the original purchase price.

Jeff Shumway · Answer

A good rule of thumb is closing costs run 2-3% of the loan amount. Most lenders will not let you do delayed financing for the full appraised value though, just as a heads up. There are some out there, but most lenders base the loan amount off the purchase price + documented receipts for repairs.

Delayed Financing Closing Costs?

Delayed Financing Closing Costs?

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