Buy cash then cash-out refinance, IRS requires within 90 Days, Banks insist on six months?

Hi Camarillo:It depends on the amount of cash out..... Most lender are limited to certain amount for cash out and of course the loan to value ratio is another factor there! Most lender will be ok with 90 days seasoning after you did buy the house! There is another restriction there which is the type of occupancy such as owner occupied, second home or investment property there which will limit your cash out! If you would like to you can contact me directly and I will be more than happy to consult you in detail with no obligation at your end! You can reach me at 714 639 6694Happy thanks giving,Shab

Do you live in the home right now or is it a rental. Are you looking for an ARM 5 year or do want a fixed loan?

You can thank the large number of consumers, real estate agents, and others for your issue today because of their fraudulent activities of not too many years past. The basic rules will not allow for a quick cash out refinance of a home you just paid cash for fear of fraud. Generally speaking, you'll need to wait 6 months, then you are free to get an appraisal and cash-out refinance the property. As a side note, cash-out transactions are usually limited to 85% loan-to-value.

Even though you own the property the transaction should still be considered a purchase, not a cash out. Your funds for the purchase will need to be sourced. Also, i would presume from your post that this will be owner occupied. Investment properties can be refinanced at anytime and the associated interest is fully deductible.

We have private money lenders that will do this regardless of the time-span. We also have portfolio lenders at going rates that will allow you to recoup up to 75% within 90 days of your HUD-1 of your all cash purchase as long as you can document that all the purchase money came from your assets. Minimum loan amount is $300,000. And, FannieMae/Freddie Mac guidelines also allow this now.Happy funding, Rudi

The solution will depend on the purpose you have for the home. If the home is an investment property, your attorney would probably tell you to maintain title to the home in an LLC. Buy the home for cash, wait the 90 days, do the cash out refinance then deed the property to the LLC. Interest would be deductable as a business expense. If you intend to make the home your primary residence, there are a couple of ways to accomplish this. Of course the easiest is to not purchase for cash, but to arrange for pre-approval of the financing and obtain the loan to purchase the home. Another is to form an LLC (You should have your attorney facilitate the establishment and ownership and buyout option of the LLC, since the lender will probably not treat the transaction as a purchase if you are the owner of record of the LLC). Lend the money to the LLC to fund the purchase, have the LLC make the purchase. After 90-180 days (depending on the lender's flip property policy) purchase the home from the LLC using a purchase money loan. Finally, you may be able to arrange for a short term arrangement with a private money lender to facilitate the purchase. But again, the simplest solution is to not pay cash. Good luck.

All of these answers miss the point of the IRS 90 day rule.If the interest on a primary or vacation residence (non-investment property) is to be considered Acquisition Indebtedness and therefore tax deductible a mortgage must be obtained within 90 days. All of the issues i.e. LTV, cash-out refi etc. are issues of the lender and the loan program selected and have nothing (very little) to do with 90 days or 300 days. The question is will the indebtedness be categorized as Acquisition, Home Equity (limited to $100k and subject to AMT tax limits) or neither. If it's a primary residence or vacation home and the mortgage is to be obtained within 90 days of purchase some lenders will still categorize it as a purchase but a well written Letter of Explanation and the help of a Mortgage Planner will be needed.Contact me for further questions:Jerry JonesMortgage PlannerChicago Bancorpjjones@chicagobancorp.com