Cash Out Refinance of Free and Clear Property

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343
RPM Mortgage in California
Cash Out Refinance of Free and Clear Property
In the short video below, I discuss the delayed purchase financing exception, which permits those who have purchased a home "all cash" to refinance within the first six months of their acquisition.  Prior to introduction of the delayed purchase exception, a homeowner needed to wait six months before attempting to recapture his investment and replenish his cash reserves.
We are all aware that in a competitive purchase environment, a buyer who comes in with a cash offer will likely get priority consideration from the seller.  After all, there will be no loan approval to worry about, there will be lessened risk that if the appraisal is shy there might be big trouble, and last but not least, there is now the inherent potential for a very quick close.  Very appealing indeed.
But if you're the buyer in this situation, converting a substantial amount of liquid funds into real estate might invoke other financial considerations.  Sometimes a mortgage can be very good thing from a number of viewpoints --- not to mention when that mortgage rate may be at or near all-time lows.
As one might expect, there are some guidelines which must be followed when refinancing a free and clear property within the first six months of acquisition.  They are:
  • The new loan amount cannot be more than the borrower's documented, initial cash investment in the property, plus closing costs, fees and any points paid.  These are all subject to the new loan's loan-to-value guidelines.
  • The purchase transaction must have been arm's length.
  • The settlement statement must support that no mortgage financing was initially used to acquire the home.
  • The source of funds for the purchase must be documented.


RPM can exercise the delayed purchase financing option on programs that will accommodate loan amounts to $1,000,000.  If you recently worked with all-cash buyers to purchase a home, this is a great follow up topic for your next "check in."  If you need more information about the delayed purchase financing exception or any other residential mortgage program, simply call me at 877-270-5959, or send an e-mail to Online pre-approval is always available for your clients at



Robert J. Spinosa

Home Loan Professional
BRE: 01297944 NMLS: 22343

1058 Redwood Highway
Mill Valley, CA 94941

877.270.5959 Toll Free
415.367.5959 Cellular
415.366.1590 eFax



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Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer

Robert, really great information you shared for homeowners or buyers.

Aug 09, 2013 02:32 AM #1
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Rob Spinosa

Vice President of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?
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