Buying in Sun City Center With Cash? Know Your Options First

You may be able to. The Fannie Mae Selling Guide, B2-1.3-03 has a rule called the delayed financing exception. It allows a cash-out refinance within six months of buying, counted from the purchase date to the day the new loan pays out. The main conditions:

• The purchase was an arm's length sale.
• Your closing statement shows no mortgage was used, and the title search shows no liens.
• You can document where the purchase money came from, usually with bank statements.
• The new loan can be no more than the amount you documented spending on the purchase, plus the closing costs, prepaid items and points on the new loan.
• The regular cash-out limits still apply, measured against what the home appraises for now, along with every other cash-out rule.

So you may be able to get your cash back, though maybe not all of it, since the limit is figured from today's appraised value.

For a condo or villa, it also depends on the building. Delayed financing is a conventional loan, so the condo project has to qualify for one. When a building doesn't qualify for a conventional loan, I have creative financing and non-QM options for non-warrantable condos, and more on non-QM and portfolio loans. Programs differ, so talk with me before you buy. That's one more reason I check the building early.

After six months, it's a regular cash-out refinance, which asks that a borrower has been on title for six months.

Keep the final settlement statement, plus statements for each account the purchase money passed through, so the trail from savings to closing is clear.

Two details matter. If money came from a home equity line on your current house, a delayed financing loan has to pay that line off or down. And if family gave you money toward the purchase, gift funds can't be paid back out of the new loan.

If your money is in a house you haven't sold yet, timing is the hard part. A bridge loan (or swing loan) is one way through. The Fannie Mae Selling Guide, B3-4.3-14 accepts a bridge loan as a source of funds if it isn't secured by the new home, and if the lender documents that you can carry the payments on the new home, the current home, the bridge loan and your other debts.

When the new home will be your primary home, Fannie Mae B3-6-05 lets the lender leave the bridge loan out of your debt figures once your current home has a fully signed sales contract and any financing contingencies are cleared. Programs differ by building and by file, so I compare what's available. On a condo or villa, the project still has to clear before a bridge loan can close. See Florida bridge loans.

Under some programs, yes. The Fannie Mae Selling Guide, B3-3.4-06 allows money in a 401(k), IRA, SEP or Keogh account to be used as qualifying income if you have unrestricted access to it. The lender subtracts any early withdrawal penalty and what you need for reserves, closing costs and the down payment, then divides the rest by the months in the loan term. That counts as income, so you may be able to qualify on savings and leave more money where it is.

Under Fannie's version, the loan can be up to 70% of the home's value, or 80% if the person whose savings are used is at least 62. It covers a primary home or second home, on a purchase or a limited cash-out refinance. That means it doesn't fit a delayed financing loan, which is a cash-out refinance, though other income rules, such as those for pension or retirement income, may still apply. If your income on paper is mostly savings, talk with me before you buy. On a condo or villa, the building still has to qualify for the program you use. Here's more on asset depletion loans in Florida.

Florida added condo safety rules starting in 2022. Under section 553.899 of the Florida Statutes, condo buildings three habitable stories or taller need a milestone structural inspection by the end of the year they turn 30 (25 where the local building agency requires it, for reasons like nearness to salt water), then every 10 years. Section 718.112 requires those buildings to have a structural integrity reserve study, or SIRS, at least every 10 years, with reserves based on it.

A one or two story villa building may fall outside those laws, but lending rules still apply. The Fannie Mae Selling Guide, B4-2.1-03 requires a condo project to comply with state law, and treats a project as ineligible if it needs critical repairs, failed a mandatory structural inspection, or has unfunded repairs over $10,000 per unit due within 12 months. Mandatory memberships in amenities owned by an outside party, and recreational leases, also make a project ineligible. An age-restricted community on its own isn't a problem.

Until inspections, reserves and repairs are in order, a building may not qualify for a conventional loan. That matters even for cash buyers, since the next buyer may need one. When a building doesn't qualify for a conventional loan, I have creative financing and non-warrantable condo and non-QM options. Programs differ by building, so talk with me. If reserves or a special assessment is the hang-up, see Florida condo special assessments. Before you make an offer, send me the community and building name, and I'll check the building early.

That's your call, best made with your financial advisor. The CFPB's guide for older homeowners on using home equity notes that none of the common ways of borrowing against a home turns all of your equity back into cash, and suggests talking with an accountant, financial planner or advisor before taking out a loan. Paying cash suits plenty of people. I'd just like you to choose knowing your options. This is general information, not financial advice.

Buying in Sun City Center, or bought with cash in the last few months? Send me a note (Travis Penny, NMLS 1649161) and tell me where you are. I'll go over which options might fit and which papers to keep.