Buying Now With Cash - Refinancing After

5 Replies

Can I use any bank/lender to refinance after I buy a home with cash? Do they have any special restrictions on the type of dwelling they finance? The reason I'm asking is I am in the process of purchasing a duplex with conventional financing but it has come to my knowledge that this duplex was noted on the appraisal as a "site condo" but with further investigation it is considered a "row house". Fannie Mae and Freddie Mac do not finance these. So my current lender is denying the loan for it. I could pay cash but I would need to refinance immediately and need to know if it would be a problem or isn't it a problem at all since I would own it. I'm confused and the seller is ready to sell to someone else.

@Chris Hernandez it is possible to immediately refinance but will need to meet the lenders guidelines. The term is "delayed financing" - Fannie Mae will do this with no title seasoning- you will have to check on LTV. Your lender told you that Fannie and Freddie don't finance this property type - very important for you to understand if this is your lenders "bank overlay" or a real restriction by F&F. I would first ask if it is an overlay and if they say it is not - ask for the section of the "Fannie or Freddie selling guide" that prohibits this. The selling guide you can download on their respective sites for free and verify what you are being told - you may find that it is an overlay and a direct fannie/freddie lender can do the loan.

If it all checks out and is prohibitied, contact buyers agents of like property in the area for like type property and see how the units were financed that will give you warm leads to your financing need. If you need to cash out with a bank the seasoning requirements may hurt your timeline to get your cash back out.

I hope that helps - Good Luck!

If you can get an extension you can shop around it both type of properties  are eligible under conventional loan. You can cash out under delayed financing exception.

Thanks for the info Travis &Harjeet. I'll look into it even further.

@Chris Hernandez the description here certainly sounds like a bank "overlay" - meaning an "extra" rule that they place on their loans.  If the bank in question won't lend on it now, they won't lend on it if you buy with cash either.  I would certainly seek another bank's opinion before buying the home with cash.  

I've checked with a few different banks now and they're not interested ... too many red flags for them. I'm not going to get myself in a bind so I may just let this one go if the current lender decides against financing it. Thanks for all the advice!

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