At minimum, you must have a median FICO ® Score of 620 or higher, among other qualifications. The minimum score for a Jumbo Smart loan from Rocket Mortgage ® is 680 or better.
You’ll get the best mortgage rates on conforming loans, or mortgages that are eligible for resale to Fannie Mae or Freddie Mac after origination. If you’re applying for a nonconforming loan, you won’t have to comply with these rules.
In order to qualify for a conforming mortgage through delayed financing, you must comply with their rules. Fannie Mae is the largest purchaser of mortgages by far, so you’ll most likely have to meet its requirements to be eligible for delayed financing. Let’s take a look at those:
- Your new loan amount can’t be higher than the total of what you paid for the home, including the purchase price, closing costs, prepaid fees and points.
- Your original purchase had to have been what’s called an “arm’s length transaction.” That means you can’t be related to or have a personal relationship with the seller. For example, you can’t buy a house with cash from your parents, payday loans Miamisburg OH your boss or your friend and then get delayed financing on it.
- You need to provide proof that you paid in cash, like your Closing Disclosure, settlement documents or recorded trustee’s deed showing that no mortgage was used to obtain the property.
- You have to share documentation of the source of the funds you used to purchase the house.
- If you use savings earned from your employment income or an unsecured loan like a personal loan, you’d need to share the documentation of those transactions.
- If you have a loan secured by an asset other than the new property (a home equity line of credit, or HELOC, on another home), you’d need to show that the cash you took out was used to pay off or pay down the loan or HELOC on that other property and not to pay for the purchase of the new home.
- If you were given gift funds for the cash purchase of your new property, you can’t reimburse the donor with the proceeds you’ll get from delayed financing.
Keep in mind that all of these requirements may vary depending on the type of loan product you’re looking for and what lender you’re working with. Speak with a Home Loan Expert for further details.
Why Might My Delayed Financing Fall Through?
There are a lot of requirements and, as you can imagine, sometimes things don’t work out perfectly and your financing ends up falling through. There are two main reasons why delayed financing loans fail to close.
There are a lot of documentation requirements for delayed financing. If you don’t have everything you need, you’ll have to wait at least 6 months from the date you purchased the property to complete a typical cash-out refinance.
You may or may not have had the house appraised when you bought it, but a lender will require a home appraisal before your mortgage can be approved. If the house appraises for lower than the price you paid for it, you’ll have to figure out a different financing option or absorb the difference.
The Bottom Line: Delayed Financing Can Free Up Your Money For Better Opportunities
Delayed financing helps you take advantage of opportunities by keeping homeowners and real estate investors liquid after the all-cash purchase of property. If you purchased your home with cash and are tired of feeling house poor, talk to one of our mortgage experts about whether you qualify for a delayed financing mortgage. Ready to start your application? We’ll be here to help every step of the way.