Using Cash Purchase with Delayed Financing to Win Purchase Money Contracts

The regional North and South Carolina real estate market is turning into a very competitive market.  Bidding wars are becoming more and more common.  Good for sellers, however, stressful for buyers.  And since cash is king, the competition has led to cash contracts winning out over other contracts, sometimes forcing borrowers who would prefer to purchase their home with financing instead of tying up all of their cash into their home purchase in order to buy “the dream home” they are bidding on.

This is where delayed financing comes in.  Fannie Mae allows client who have recently bought a home with cash to refinance the home without having to wait the required minimum of six months for title seasoning that is typically required in a first mortgage refinance.  The advantage of a cash offer is not limited to the benefits of a quick closing window, it also might allow the buyer leverage to purchase the home without being the highest bid.  These savings might offset any costs associated with refinancing the home with delayed financing.
Cash-out refinance transactions must meet the following requirements:
• The transaction must be used to pay off existing mortgages by obtaining a new first mortgage secured by the same property or be a new mortgage on a property that does not have a mortgage lien against it.
• Properties that were listed for sale must have been taken off the market on or before the disbursement date of the new mortgage loan.
• The property must have been purchased (or acquired) by the borrower at least six months prior to the disbursement date of the new mortgage loan except for the following:
• There is no waiting period if the lender documents that the borrower acquired the property through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership).
• The delayed financing requirements are met. See Delayed Financing Exception below

What if my borrower’s needs exceed the conforming loan limit?

Great question!  One of the biggest problems for you and your clients is that that many Jumbo lenders do not allow a true delayed financing option.  This might be another of the many reasons you may want to recommend Northpointe Bank to your clients.  Northpointe Bank offers a variety of Jumbo financing option up to $3,000,000 and one of those options includes delayed financing. 

Our Jumbo delayed financing allows your clients to borrower up to:

• $1,000,000 with 10.1% down
• $2,000,000 with 20.0% down
• $2,500,000 with 30% down
• $3,000,000 with 35% down

One of the best things about this product is that it can:

• Be used to purchase an Owner Occupied, 2nd Home or Investment Property
• Although fund or the purchase cannot be gifted, the borrower can use a loan such an unsecured loan, business loan, home equity on a different property (family member loans are not allowed).

So, if you have a borrower in a multiple bid situation that MUST have that house and has the resources to pay cash under the above terms, this is a great tool to use to help your next client buy the house of their dreams.  Delayed financing with Northpointe is just one of the many ways Northpointe Bank is making is making it easier for you to sell your next home! 

Northpointe Bank is an Equal Housing Lender
All loans are subject to credit review and approval. This is not a commitment to lend.

This article was written by Steve Jackson, a Senior Mortgage Loan Officer at Northpointe Bank. For more information; please email Steven.Jackson@Northpointe.com
 

Steven Jackson

As the SW Florida Regional Manager for SeaTrust Mortgage, I am actively looking for experienced loan officers, loan officer assistants and mortgage loan processors that we can pair with our trusted real estate agents' networkBorrowers, we offer Conventional, FHA, VA and USDA loans as well as Bank Statement Loans, 0% down up to a purchase price of $700,00, Medical Professional loans to 100% of the purchase price; our medical program includes Pharmacists, Chiropractors and VeterinariansRealtors, we close loans quickly and professions... more