Delayed Financing Cash Out

7 Replies

I have been getting conflicting information on delayed financing cash out refi.  Purchasing home for $380,000 and hoping to refinance and pull out $50,000 - $70,000 to complete renovations.  $300,000 of initial purchase will be from an unsecured intra-family loan and the remaining $80,000 from my savings.  Was just told that because the $300,000 was not in my personal account for 3 months prior to the closing that I have to wait 6 months to refinance.  

After closing the cash transaction we will keep $50,000 with the intra-family loan to take advantage of the lower interest. The remaining amount will need to be secured with a mortgage lender and hope that the appraisal puts us where we need to be. We cannot wait 6 months to do this!

What is the best way to structure this so that we also have $50,000 - $70,000 to complete the renovation? I am thinking the home will appraiser closer to the $400,000 range pre-renovation.


@Laurie Fiegl Your lender is right you can't cash out because you use other people money to funds the transaction. You have to wait 6 month or try other source to refinance this property.

you will need to  wait 6 months ..the  current appraised  value isn't a factor .....depending on if the home is your primary residence or an investment  property - the amount  you will be able to access  will be different ........if the  funds you used to buy the home were  your own funds and could be paper trailed ..then an immediate  cash  out  refinance  might be possible  

Originally posted by @Laurie Fiegl :

@Harjeet Bhatti If I reading it correctly it states I just have to show: "The sources of funds for the purchase transaction are documented (such as bank statements, personal loan documents, or a HELOC on another property)." Wouldn't this be a personal loan document?

Delayed financing is for cash buyers using their own cash. You are a cash buyer as far as Realtors and as far as the seller and escrow are concerned. You are not a cash buyer as far as Fannie Mae is concerned.

This is like "Am I a first time homebuyer?" -- there are cases where the answer from the IRS is "yes" and the answer from Fannie Mae is "no." 

Schrodinger's cash purchase

Two last questions:

1.  What if my husband and I have $380,000 in seasoned assets that we can prove when obtaining a mortgage?

2. If I can get the family member to hold the loan for 6 months.  What sort of loan would you recommend getting so that we can start our renovations and not have to wait for the cash out refi?

@Laurie Fiegl Regarding item 1, as long as you can show the cash came from your accounts, even a LLC bank account, 401k or HELOC, are adequate. Using assets or net worth would not qualify as I understand it.

Regarding item 2, you could look into Bridge Loans or even Hard Money Loan options with construction costs included. Just an idea.

Additionally, I recommend reading this post on a possible way to get around the Delayed Financing requirements, see section 3. 

Note, in a refinance, even if you pay all Cash, usually you will only be able to pull out 75% LTV SFH or 70%LTV for multifamily. So, in this case, at most you will pull out $300,0000 if property appraises at $400,0000. Hope that helps!