Added to Title Then Cash-Out Refinance?

[Justin Juhan]

Hypothetical situation here, If you were trying to buy a home from someone you know really well, and they were to agree.  

Could you record a warranty deed adding yourself and the owner as the owners on title, then cash-out refinance in just your name, and then warranty deed the previous owner off title?  

It seems like this would allow you to do owner occupied (if you intended to live in the property) and also eliminate the down payment requirements a lender would require because you already "own it", then have the previous owner record/hold a second for the remainder.