Fannie Mae’s New “Delayed Financing Rule”

If you are purchasing or have recently purchased a home with all cash, there may be some good news for you.  Fannie Mae’s new Delayed Financing Rule will give all cash buyers a new post-purchase financing option.

Under current Fannie Mae regulations, all cash buyers may not apply for a cash-out refinance before 6 months have lapsed.

The Delayed Financing Rule, introduced as part of Fannie Mae’s Selling Guide update SEL-2011-05, home purchasers may now pay all cash for a property, and then immediately take out a mortgage.

According to Fannie Mae, eligibility depends on:

  • The new loan amount is not more than the documented purchase price
  • The purchase transaction was an arms-length transaction.
  • Purchase transaction documented by the HUD-1
  • HUD-1 confirms no mortgage financing was used in purchase transaction
  • Title report confirming there are no liens on the subject property
  • The source of funds for the purchase transaction can be documented
  • Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.
  • All other cash-out refinance eligibility requirements are met and cash-out pricing is applied

Although intended for real estate investors, you don’t have to be an investor to take advantage of the Delayed Financing Rule.   Mortgage rates, closing schedules, and underwriting process will remain the same as with any cash-out refinance, and no specific fees will be attached to the loan.

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