Delayed Financing

delayed financingOn occasion, a home buyer will purchase a home for either cash, or, they may use a lien secured by another asset or property. This can happen when a property is in a fast-selling market where the buyer does not wish to delay the closing, or in cases where a property may need renovation and the property would not meet the minimum property standards for a mortgage loan. After the closing on the initial purchase, the home buyer can come back and put financing on the property. This way the borrower recovers their cash position that they had prior to purchase. When a purchaser does this, it results in cash back to the borrower. Normally, when a borrower is receiving cash back from a transaction, the borrower must have owned to property for a minimum of 6 months prior to the mortgage transaction. However, under the delayed financing option, a purchaser can go ahead and refinance the property within 6 months from the initial purchase transaction.

There are several important points that must be addressed for a delayed financing transaction. First, the borrower must have closed on the original purchase transaction within 6 months of the date of the closed for the delayed financing transaction. Second, the purchase transaction must have not had any mortgage financing secured against the subject property.

When a delayed financing transaction takes place, the lender will review the source of funds used to originally purchase the property. If the borrower utilized gift funds, then none of the funds from the new can be used to reimburse the donor on the first transaction. If the borrower utilized funds that were secured against another asset or property, funds from the delayed funding transaction must be used to first pay off or down the secured funds.  

Delayed financing transactions are very complex and there are multiple guidelines that must be met for them. Because of this, it is highly recommended that potential borrowers utilizing the delayed financing option contact a qualified mortgage professional. The loan officers at Googain are available to discuss the delayed financing option and they work. Contact one today for more information.

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