Non-contingent, cash offer -- Can you still mortgage?

Question

This may be a stupid question, but I thought I'd ask anyway.

If you make a contingency-free, cash offer on a property, can you still mortgage it? That is, if you we're to decide after the agreement is signed that you'd rather mortgage the property instead of tying up all of your cash. I assume you could since, if you couldn't get the mortgage for some reason, you'd be out your earnest money since there's no mortgage contingency.

Am I missing anything?

Trent Currie · Answer

Be careful you don't run into seasoning issues under this scenario. Many commercial banks will try to make you hold it for a certain period of time prior to financing it.

Jesse Gonzalez · Answer

@Mark Beekman

Fannie mae does not have an issue with Capital Gains.  Below is a snippet from the actual sellers guide straight from fannie mae.  Call a loan broker, they should be able to get you a loan.

"History of Receipt: Two or more years of receipt of a particular type of variable income is recommended; however, variable income that has been received for 12 to 24 months may be considered as acceptable income, as long as the borrower’s loan application demonstrates that there are positive factors that reasonably offset the shorter income history."

Mark Beekman · Answer

This may all be a moot issue for me. I just talked to my bank and was told that they're now using a new model for determining "income", which does NOT include capital gains. My sole source of income for the past four years has been capital gains!

So, I hate to change the subject from the original post, but does anyone know of any small banks or credit unions that will include capital gains in their income determinations? I'm in the Philadelphia area.

J Scott · Answer

Exactly.  And the most common place for it to be prohibited is in an REO addendum.  Make sure you read the contract carefully...

Steve Wilcox · Answer

and by doing it at purchase you save on a number of fees associated with the refi, legal, title, ect

On REO's it can upset the reo broker when you come to the table if you are financing rather than cash, so I usually give them a heads up if you want to do business with them in the future

Bill Gulley · Answer

You can ultimately finance a cash offer so long as it  is not prohibited in the purchase contract. :)

Matt Devincenzo · Answer

Yes you can.

On FL (where I buy) purchase agreements the cash option actually has the clause that the offer is cash but you reserve the option of obtaining financing as long as it doesn't effect the purchase in any way.

The advantage to doing that and not waiting to refi is I'm waiting on seasoning now for my last cash purchase before I can cash out, if I could have financed initially I wouldn't have to wait to get my cash out. If for whatever reason your lender isn't able to fund in time, no problem just pay with cash so as not to lose the property and cash out later if you wanted to.

Andres Piedra · Answer

You should be okay. But, you could always just close the deal w/ cash and then finance after you own.