Delayed Financing (Defined Term) has more to do with avoiding normal Seasoning Requirements (6 months) when doing a Cash-Out Refi than really anything else. It could be called “No Seasoning Cash-Out Refinancing.” Basically Someone delays getting financing by first paying cash (or can be from a HELOC, or secure loan) and THEN decides to put financing on the property after COE but doesn't want to wait the standard 6 months seasoning!
Need Cash from Your Home Fast?
Delayed financing lets you access cash without the 6-month waiting period. See if you qualify and start the process today.
2 scenarios could happen
- Not realizing it Ahead-of-Time: Use your own cash to buy and then you decide to replenish cash and don't want to wait the standard 6 months seasoning requirement for CashOut.
- Planning Ahead-of-Time: same concept above.
Why would someone ever want to do Delayed Financing (what is the benefit)?
- Avoid Seasoning Requirement for Cash-Out Refi
- Want quick COE and save time by paying cash
- Better negotiating position by offering to pay cash
Requirements
- Follow standard Cash-Out LTV & Cash-Out Interest Rates
- New Appraisal Required
- Money replenishes where money came from
Example for Delayed Financing
- Bought Home For: $200,000
- CCs/PPs: $5,000
- Max Loan: $205,000
- New Appraised Value = $230,000 x 80% LTV (for Primary) = $184,000 Max Loan
- Like having put an original 8% down-payment
Alternate way to do delayed financing
Example – Parent buying a home for child with cash and then child does R/T refinance to cashout parent. Requirements:
- Parent would have to have a basic standard loan with child (deed of trust etc… title company can really help) and then child would do normal R/T Refinance to pay Parent off
- R/T Refinancing LTV and Interest Rate % would apply
- New Appraisal would be required
As always…
If you have any questions about this or if you have any questions you'd like us to answer on our podcast, you can submit your questions using our contact form or give us a call at +1 (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We'll personally work with you and help you through the whole process.
Be sure to ask us for a free quote on your next mortgage. We'll personally work with you and help you through the whole process.
Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you'd like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.
Learn how to secure cash out without the typical six-month seasoning. For more insights, explore an example of a mortgage recast, discover the benefits of an assumable mortgage, read about combining a cash offer with financing, and review details on the FHA flip rule waiver.
Mortgage Brothers LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Mortgage Brothers NMLS 1007154, NMLS #210917 and 1618695. Equal Housing Opportunity.
Transcript of the Mortgage Brothers Podcast
Delayed Financing: How to Get Cash Out Without Waiting 6 Months
Introduction [00:02]
Welcome to the Mortgage Brothers Podcast! I'm Eddie Knoell, and I'm Tom Knoell. In this episode, we're talking about Delayed Financing—a mortgage strategy that allows you to cash out on a property purchase without waiting 6 months.
If you've recently purchased a home with cash and want to access that equity sooner than the usual 6-month seasoning period, this episode is for you.
What is Delayed Financing? [01:20]
Delayed financing is a specific mortgage rule that allows homeowners who purchased a home with cash to immediately take out a mortgage and pull equity from the home—without waiting six months.
- Normally, if you buy a home in cash, lenders require a six-month seasoning period before allowing a cash-out refinance.
- Delayed financing bypasses this requirement if you meet specific guidelines.
Why Would Someone Use Delayed Financing? [03:53]
There are several reasons why a buyer might purchase a home in cash and then apply for delayed financing:
- Competitive Advantage – Sellers prefer cash buyers because they can close faster, so buyers use cash to secure a better deal.
- Faster Closing – Cash purchases bypass traditional loan approvals, allowing for quicker closings.
- Unlocking Equity – Buyers may want to free up their capital for other investments after securing the property.
For example, we recently worked with a borrower who bought a home with cash to get a $10,000 discount from the seller. However, after purchasing the home, they wanted to access their cash again. That's where delayed financing came in.
Eligibility for Delayed Financing [05:00]
To qualify for delayed financing, you must prove that the money used to purchase the home was your own funds and properly sourced.
Accepted Sources:
- Personal bank accounts
- Investment accounts
- Home equity lines of credit (HELOCs)
- Retirement accounts (401k loans, IRAs, etc.)
- Business accounts (if you're the majority owner)
NOT Accepted:
- Gifts from family members
- Personal loans from individuals
- Inheritance funds that cannot be sourced
- Exchanging assets (e.g., selling a car to finance the purchase)
Key Rule: You can only refinance and withdraw the amount that was originally your own money.
Loan Limits & Terms [07:21]
- You can cash out up to 80% of the home's appraised value.
- The loan is priced as a cash-out refinance, meaning the interest rates follow standard cash-out pricing.
- If you want to withdraw more than 80%, you must wait 6 months.
Alternative: Rate-and-Term Refinance for Family Transactions [08:38]
There's another version of delayed financing that works differently—often used when a family member buys the home in cash for you.
Example:
- A borrower was losing offers to cash buyers, so they asked their father to buy the home for them in cash.
- After securing the property, they wanted to refinance their father out.
- Instead of a cash-out refinance, they used a rate-and-term refinance to pay back their father's loan.
How It Works:
- The person buying the home in cash (e.g., dad) must have a recorded lien (Deed of Trust) on the property.
- The loan must be structured like a real loan (e.g., must include interest and payments).
- The borrower then refinances the “loan” into their name as a rate-and-term refinance, which allows them to finance up to 95% of the home's value.
Why This Is Better?
- Higher Loan-to-Value (LTV) – You can borrow up to 95% instead of just 80%.
- Better Interest Rates – Rate-and-term refinances typically have lower interest rates than cash-out refinances.
Title & Documentation Requirements [11:39]
If you're using this alternative financing method, title companies play a key role:
- The title company records the lien (Deed of Trust) for the person funding the purchase.
- There must be a loan agreement between the buyer and the lender (e.g., the father).
- When refinancing, the loan is treated as a rate-and-term refinance, not a cash-out refinance.
Summary: Two Types of Delayed Financing [12:09]
1. Traditional Delayed Financing (No-Seasoning Cash-Out Refinance)
- Used when a buyer purchases a home with their own cash and wants to refinance quickly.
- Allows up to 80% cash-out of the appraised value.
- Must prove the cash source.
2. Alternative Delayed Financing (Rate-and-Term Refinance)
- Used when a family member or investor buys the home for you in cash.
- Requires a Deed of Trust to structure the loan.
- Allows refinancing up to 95% LTV with better interest rates.
Final Thoughts [12:40]
Delayed financing is a great option for buyers who purchase homes with cash but need to unlock their equity quickly, want to avoid the six-month waiting period, or need a competitive edge in the home-buying process.
If you have any questions about delayed financing or refinancing strategies, contact the Mortgage Brothers Team today! If you found this video helpful, like, subscribe, and hit the notification button for more mortgage insights. Thanks for tuning in!