Delayed Financing Exception? Who has used this?

[Breelon Bryant]

I stumbled onto this strategy listening to a podcast and have been reading up on it. Can someone explain this to me? Because this is a game changer. Can you use this if you cash bought a house with Hard Money?

[Annchen Knodt]

@Breelon Bryant, it’s definitely a powerful tool, but can also be tricky so you want to make sure to do all your research and talk to your lender about the exact requirements.  A few points:

• Per the Fannie may guidelines for the "delayed financing exception", you can borrow up to 75% LTV, OR your initial purchase price (this can include closing costs), whichever is LOWER
• Lots of people have had success with including rehab costs on their HUD / closing statements, so that the second part of the above guideline isn't the limiting factor, enabling a BRRRR-type strategy without having to wait the full 6 month seasoning period. See this blog post for further details. It seems like other people have had issues doing this though so make sure you talk specifics with your lender! 
• I don't think that it works on a house purchased with hard money, because the purchase has to be done with YOUR funds, not a loan from someone else.  I actually had a delayed financing application fall through bc I was applying for the refi in my name, but the house was purchased with funds in my partnership's bank account.
• Alternatively, you may be interested in another creative strategy for doing a cash out refi without waiting 6 months, described here 

Hope this helps!