Buy with funds from HELOC, then get mortgage/cash out refi

[Paul C.]

I am intending on buying another property. To make my offer more enticing, I am thinking of making it a cash offer. The cash would come from a HELOC I have. Once the deal closes, then I would try to get a mortgage on the property (I think via a cash out refi?). Are there any pitfalls that I should be aware of with this method? Like is there a seasoning period I need to be aware of? Are mortgage rates different if not used in connection with a purchase? Thanks!

[Jason Wray]

Paul,

When you buy a property using "All Cash" there is no seasoning you can take cash out same week. It's called a delayed financing or DSCR. You cannot use an appraisal until the (6 month) mark but if you do any renovations/rehab you can show proof of receipts and the bank will use the purchase price and the total rehab/repair cost total and allow up to 75% cash out.

Some lenders will not allow the repairs/renovations to be added into the cash purchase so make sure you ask those questions up front!