Is a mortgage on a cash buy still a refi?

Question

Relative newbie question here... I know if I wanted to refi my current mortgage (I don't it's 2.99%!), to pull cash out, that's obviously a cash-out refi...

Is it considered the same if I were to buy a house for cash, and then wanted to get a 50 to 60% mortgage? It's not a refi, but it would be a cash-out transaction. Would that fall under the cash-out refi category? Or would it be considered a conventional first mortgage? And for clarification, it would be a primary residence, not an investment property.

Robin Simon · Answer

This will be considered a cash-out refinance except a small few lenders will have a "delayed financing" option which would be treated as an acquisition

Greg Scott · Answer

If done within 6 months, that is known as delayed financing, and it typically has the same terms as if you bought with a mortgage up-front.

If you wait 6 months, you can do a true cash-out refi and theoretically pull out more than you put in.

Stacy Raskin · Answer

@Bob Foglia, are you asking if DSCR financing is the same as conventional rates or?

Tony Severance · Answer

@Bob Foglia As others have mentioned above, taking cash out of a property via a mortgage within the first six months is call Delayed Financing. This is how it works...The value of the property when calculating your LTV will be either the purchase price or the Appraised value, whichever is LESS. However, if you have made improvements to the property, you can submit the verifiable costs of those improvements and add them to the purchase price to reach a cost point of your acquisition. You then multiply the Max LTV % to that cost point to determine your loan amount.

With all of that said, I am in the process of doing a couple of no-seasoning cash out refinances in Florida via a DSCR loan. Great product!!

Eliott Elias · Answer

Would just be a cash out, rate would change according to market interest rate

Dave Skow · Answer

@Bob Foglia-  this would be considered a conventional  1st mortgage  cash out refinance ..... with a  50-60% ltv - you  should be able to  get  decent  pricing  as many of the  LLPA  ( pricing  adjustments  lenders  use)  are   reserved for  higher LTVS -  let me know if  you  would like a CO based loan officer  referral ...good luck

Nicholas L. · Answer

@Bob Foglia

the short answer: if you buy a house for cash, then yes, you can put any mortgage you qualify for on it - conventional, DSCR, etc.  there will be different rules and rates on each, but you can still choose.  in general, a conventional will look at your DTI ratio and your personal financial picture.  A DSCR will look at the income of the property.

in my experience, the concept of delayed financing isn't as relevant as it was several years ago.  I am not seeing a hard 6-month seasoning requirement on most loans, even on some conventional loans.

Stacy Raskin · Answer

@Bob Foglia, yes- delayed financing and cash out refinances are priced the same. Let me know if you would like to discuss further. I'm a mortgage broker who works with lenders with very competitive rates.

Bob Foglia · Answer

Thanks for the replies… I appreciate the input.

Are the rates and fees comparable to conventional financing?

Is a mortgage on a cash buy still a refi?

Is a mortgage on a cash buy still a refi?

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