Jun 17, 2021
Delayed Financing, Defined:
Delayed financing is a method for getting a mortgage after you’ve
purchased a piece of real estate using cash. It provides a way for
investors to remain liquid and allows owner-occupants to finance a
home purchase. Put simply, delayed financing offers a means of
purchasing a home in which you pay cash up-front, then quickly
obtain a cash-out refinance to mortgage the property. Doing so
effectively returns a large portion of the sums you paid to acquire
a home to you, which you then can use for other purposes (e.g.,
savings, investments, renovations, etc.).
Under the terms of a delayed financing transaction, you basically
buy a home for cash, then immediately take on a mortgage as a way
to reclaim most of the purchase price. This method of financing
allows you to both make a more attractive all-cash offer to home
sellers (giving them the confidence that a transaction will close),
then put money right back in your pocket. Via delayed financing,
you can use a cash-out refinance as a means to obtain a mortgage
and enjoy the flexibility of making long-term payments over a
period of time so as to avoid tying up all your savings in the
home.
Cash buyers should be advised: If you’re seeking to obtain delayed
financing on a property purchased in the last 6 months, you can
take out cash immediately without waiting. Otherwise, if you buy a
home using a mortgage instead of paying with cash, your name is
required to be on the property’s title for a minimum of 6 months
before you can take out cash and refinance your home.
An important tool in real estate investors’ arsenal, just over
one-third of all home purchases are now all-cash deals, as these
transactions help keep investors more liquid so that they can buy
more properties.
Rehabbers: Some buyers are interested in purchasing properties that
are currently uninhabitable or in need of extensive work with an
eye toward rehabbing them either to live in themselves or rent out
at a profit. These individuals are known as rehabbers. Note that
financial lending institutions will not offer a mortgage on an
uninhabitable home, no matter its potential, making rehabbers among
the most frequent cash buyers.
If you'd like to meet with Beau to talk financing, book a
call here
( http://bookwithbeau.com/ )