Pay cash & refi --OR-- purchase loan from get-go?

[Paul Winka]

Been wondering about whether a purchase loan from the get-go is the wisest strategy each time to buy new properties, or pay cash and then refinance shortly afterward?

What would be the value added (if any) to pay cash for a house, then refinance it? It seems like a mistake to buy with cash then immediately refinance because I have never heard of anyone doing that, but can’t think of a reason to never ever do it. My thoughts are:

REFI PROS: Immediately buy the property, put the capital to use in the shortest time possible. Also, buyers would go to the front of the line when competing with others to get the property by not having as many contingencies. All cash offers are rather compelling. Closing quickly, possibly paying less with removing financing contingencies too.

REFI CONS: Some duplicated costs, say with an appraisal, -OR- skip appraisal and risk overpaying, then do another appraisal at bank’s behest in a few weeks for the refi. Plus possible other duplicated costs, like recording fees, transfer taxes, a few other administrative hurdles with insurance. Since they bank knows I own the house already they would choose to drag feet on refi loans over purchase loans for other customers.

PURCHASE PROS: Anecdotally have heard that the timeline for purchase loans is faster. No duplication of certain costs, like deed recording fees, appraisals, etc. The process will protect me somewhat from overpaying because of the appraisal. Also, less hassle with appraisers because they “magically” seem to come in close to the offer price.

PURCHASE CONS: Longer timeline to get to ownership, less competitive offers because financing could fall though.