Buying a home with cash can help you move fast and beat other buyers. Yet many people don’t know they can still get that cash back soon after closing. This is where the Delayed Financing Exception can help. It lets you buy with cash now and refinance later to reimburse yourself. This option can make the process smoother, especially when timing or competition is tough.
⚡ When Paying Cash First Might Help You Win
Sometimes buying a home takes more than a good offer. It takes speed. Here are a few moments when paying cash first and refinancing later may help:
✔ You Face a Bidding War
A cash offer stands out. Sellers love faster closings and fewer delays. So a cash offer can help you win the home.
✔ You Find a New Home Before Selling Your Current One
This is common. You may not want two mortgages at the same time. With cash, you can buy now and then refinance to free up the money later.
✔ You Need to Close Quickly
Sometimes homes move fast. A cash purchase avoids waiting for full mortgage approval. After closing, delayed financing lets you pull money back out.
These situations show why this strategy can be a strong tool.
📘 How the Delayed Financing Exception Works
Most lenders follow the Fannie Mae Delayed Financing Exception rules when the refinance happens within six months of the cash purchase. Here are the main points explained in simple terms:
🔹 The Sale Must Be Arm’s Length
This means you and the seller must not have a special business or family relationship.
🔹 You Need Clean, Clear Paperwork
You must show you paid cash. You also need a title search proving the home has no liens.
🔹 You Must Show Where the Cash Came From
This could be bank statements, a personal loan, or even a HELOC from another property.
🔹 Loan Funds Must Pay Off the Original Loan (If You Used One)
If you used a HELOC or another loan to get the cash, the refinance must pay that off.
🔹 You Cannot Reimburse Gift Funds
If someone helped you with gift money to buy the home, you cannot pay that gift back using the refinance.
🔹 Your New Loan Cannot Be More Than Your Actual Cash Investment
However, you can roll closing costs and points into the new loan.
🔹 Your Loan-to-Value Ratio Depends on Today’s Appraisal
This helps if the home’s value increased after you bought it.
All of this may sound complex, yet the process is very doable with the right guidance.
📞 Your Next Step
If you think this strategy may fit your situation, I recommend a short 20–30 minute call. We can review your goals, timing, and numbers to see if delayed financing is the smart move for you.
📲 Reach out today so we can get started!