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Cash is King

Mortgage and Lending with VanDyk Mortgage

I have a job because people often need to borrow money to buy property. But there are some interesting cash incentives (besides no interest!) that are now impacting the way people are buying their homes. 

As a disclaimer, cash deals don’t always trump financed ones. There are multiple factors that come into play when an offer is presented to a seller. It is however true that a cash offer will typically make a seller salivate. 

As a matter of fact, in Pinellas County Florida in September, I believe that just about 50% of the closed single family homes, townhomes, and condos were cash deals. This is a 12.4% increase over same time last year. 

What currently gives buyers even more of an initiative to pay cash is that the once enforced six month seasoning requirement before you can refinance has been abolished. Previously, a cash buyer would have to wait that period before refinancing to get his or her money back out of a property. The lure of easy cabbage would of course grab a seller’s attention when an offer comes in, but the new buyer would have to wait out the seasoning period to begin the refinance process to get their money back. Today, that money can pretty much go out and come right back in again within a 30 day period or so. Not bad. 

Please bear in mind, while that cash greased the skids of the initial transaction, getting that money back out will entail all the minutiae of any mortgage loan. Buying a home with cash does not prove you are solvent and are an excellent risk to a lender! If you are planning on doing a delayed mortgage deal and have the expectation that it is just a deposit and withdrawal equation, it is not. You are still subject to provision of all documentation and processes.

At the end of the day, I think this fighting fire with fire financing is a great option. But if you are seeking a post-purchase refinance, contact me to plan your strategy and prepare the documents for future delivery to the underwriter.