Mortgage 101
May 14, 2024

Is Delayed Financing Right for Your Home Purchase?

Estimated reading time: 2 minutes

In a competitive housing market, timing is everything. While traditional mortgages are often the go-to way to obtain homeownership, they may come with limitations. With delayed financing, homebuyers get the benefits that come with all-cash offers and recoup their investment with a cash-out refinance. Let’s dive into this form of home financing and the benefits it may bring!

What Exactly is Delayed Financing?

Fannie Mae’s delayed financing offers homebuyers an alternative to a traditional mortgage. Instead of acquiring a loan first to buy a home, a delayed financing buyer would first pay for a home in cash, make any repairs or renovations necessary, and then obtain a cash-out refinance to reclaim the funds used for the initial purchase. This effectively returns a large portion of the cash you paid to acquire the home right back to you.

Why Would a Person Choose Delayed Financing Over a Traditional Mortgage?

An all-cash offer is seen as more efficient than one with mortgage financing because of fast closing. 1/3 of all home purchase are now all-cash deals, according to reporting by Redfin.

Although every financial situation is different, it’s typical for a loan to take thirty days or more to close. Processing, underwriting, and closing are all necessary with a traditional mortgage to ensure accuracy before a lender gives you money.

In addition, delayed financing allows you to put money right back into your pocket. Instead of tying your savings into a home with prepaid costs, you can use the money you saved to make improvements to your new home for up to six months before obtaining a cash-out refinance.

What Type of Buyer Would Benefit from Delayed Financing?

Homeowners Looking to Downsize

Let’s say you’re a homeowner has already paid off the mortgage on your current home but is now looking to downsize. You could take out a traditional mortgage to finance the purchase of the downsized home or you could utilize the cash flow from selling your existing home before settling into mortgage payments later.

A Homebuyer with Cash Flow

Whether you’re an investor or a homebuyer with the financial means and reserves, delayed financing may be more effective for your financial goals. Many people use the money from a cash-out refinance to build their savings, make additional investments, pay off high-interest debt, or complete renovations.

Home Financing Solutions That Work with Your Needs

Not all mortgage programs will work with your finances or goals. It’s best to speak with a Loan Originator about what’s best for your needs. Ready to begin the homeownership journey? Contact us today to learn more about delayed financing and our other home financing solutions!

Ready to get started?

McGlone Mortgage Group offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.

Get Your Rate Now!