We have all heard the phrase “cash is king” and this could certainly be applied to the real estate market — especially when it has been so heavily weighted on the seller side. Some reasons clients utilize an all cash offer are a better use of capital in a rising rate environment or they might be under the impression (right or wrong) that they would have been unable to obtain financing.
Once they own the home there is always the ability to take out a mortgage through a cash-out refinance, but that typically comes with a higher interest rate and more restrictive terms. At Key Mortgage, we have the ability to bypass this and help your client obtain more advantageous terms through our process called delayed financing refinance. This program can help clients reclaim a portion of their cash investment in the property and take advantage of today’s lower mortgage rates. So you ask, why might someone want to do this? There are a few reasons.
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Mortgage rates have dropped within the past few weeks. From the highs of the low 8% we are now touching on the mid 6s — redeploying cash back into another financial vehicle may get them a greater return.
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Lower rates mean lower payments. Maybe they paid in cash because the monthly payment was too high. With rates coming down, having a mortgage they can manage makes financial sense.
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Their qualification picture has possibly improved. Perhaps they now are in a better position to qualify for a mortgage or come to find out they actually were the whole time.
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Gain the offer advantage in a competitive market. Like having your cake and eating it too, you can win out of multiple offers, but still take advantage of redeploying their cash into higher-yielding assets than their home.
The key component to making this work is that they complete this delayed financing refinance within 6 months of purchasing the home. There are other requirements, as there are with any mortgage product, so having your Key Mortgage loan officer provide that consultative conversation with your client is “key” to making this all work.
As we transition into this new landscape post-August 17, having that mortgage partner that is integrated into your team can be your differentiator in the eyes of your clients. It also puts them in the best possible position to achieve their goals of homeownership. Let your Key Mortgage partnership be your winning difference!
