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Mortgage  Question?
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Buy Home for Cash, How Long Wait Cash Out Refinance

If I purchase a property for cash how long do I have to wait before I can do a cash-out refinance? I have a high credit score and strong monthly income.

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Most lenders require that borrowers wait six months from the date the property purchase closes before permitting a standard cash-out refinance. Additionally, if you perform significant upgrades to the home such as a "fix & flip", lender guidelines usually require you to wait one year before the post-renovation value of the property can be used for the purpose of refinancing and enable you to qualify for a larger loan amount.

Some lenders offer a program called a delayed mortgage that enables you to do a cash-out refinance on a property you purchased for cash within six months of buying the property.  A delayed financing typically charges higher interest rates and fees than a regular cash-out refinance and the imposes stricter qualification requirements.  For example, you are required to document the source of funds used to purchase the property for cash.  Additionally, a delayed mortgage only allows you to take-out 70% of the property value in proceeds (for your primary residence), as compared to 80% for a standard cash-out refinance mortgage.  We provide a comprehensive overview of a delayed mortgage on FREEandCLEAR.

So the answer to your question depends on how quickly you need to access the equity in the home and are you willing to pay higher costs and meet tougher qualification requirements to access your equity sooner.  If the answer is yes, then a delayed mortgage may be the right financing option for you.  If you do not have an immediate need for the funds then you may be better off waiting at least six months and then doing a standard cash-out refinance, which will be less expensive and potentially enable you to take-out more proceeds.

Finally, we always recommend that you contact multiple lenders to understand how they would handle your unique situation. You can compare lenders in your area by clicking INTEREST RATES Not all lenders offer delayed mortgages so you may need to contact multiple lenders to find one that offers the program. Plus, comparing multiple lenders is the best way to save money on your mortgage.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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