Mortgage, or cash and refi?

Question

I'm looking to buy additional properties, but on an indeterminate timeline (never know when a deal will pop up), and I'm wondering if it's better to go through the mortgage dog and pony show or just buy cash and refinance after? I'm leaning towards the second, but wondering if there is any drawback to that (ie. higher rates or harder to refinance than getting a mortgage from the get-go). Am I correct in assuming that if I get a pre-approval letter from a lender, it's only good for about three months, after which point I will have to get a new one with additional credit hard pulls?

Also, will a lender balk at refinancing if I used too much of my cash reserves to purchase the house in the first place?

Ann Rosen · Answer

I work for a commercial mortgage broker that has relationship with hundreds of lenders and thousands of lending products.  Message me and we can generally discuss different types of financing.

Martin L. · Answer

Thanks for the reply Amanda. I should mention that I'm looking at out of state, but would probably try to work with Guild Mortgage, which is one of my current mortgage companies. It's not that they're amazing or anything, but I've also never had any problems with them and they also pride themselves at being a "servicer" and rarely sell their loans to other companies. It's not a big deal for most people, but it always really annoys me.

I probably wasn't clear enough in my original post. My bigger concern is whether anyone knows of any problems/issues with cash then refi vs straight to mortgage. For instance, does it cost more? less? Is it harder to get? I assume it's easier to close the sale with cash, but it would suck if I end up with problems when I try to refi.

Amanda G. · Answer

Hi Martin,

All these questions are going to depend on your chosen bank or credit union. It sounds like your best first step is to research your local banks and credit unions and find out what options you have, so that you know what would happen if you bought with a mortgage rather than cash with a refi. Good luck!