🌱 Should I buy a property with all cash or use delayed financing?

Deciding between paying all cash for a home or using delayed financing is a major capital allocation decision. Delayed financing allows you to make a competitive all-cash offer, then quickly pull your liquidity back out through a mortgage rather than waiting six months.

This calculator compares your projected wealth under both paths. It factors in opportunity costs, cash flow differences, and the closing costs of refinancing to help you determine which strategy yields more over time.

If you choose to rent the property, both scenarios generate monthly income, but a delayed financing mortgage will consume a large portion of that cash flow. Conversely, pulling cash out via delayed financing allows you to invest a large lump sum immediately in the market.

By toggling your intent to rent the property or invest your available cash, you can see how opportunity cost and rental yields interact. We assume any excess cash flow is reinvested at your expected market return.

Fannie Mae's delayed financing exception lets buyers recoup their cash quickly, but it is typically priced like a cash-out refinance. This means you may face slightly higher interest rates and standard closing costs of 2% to 5% of the loan amount.

For clarity, this model simplifies away taxes on rental income and the potential tax deductibility of mortgage interest. Deducting mortgage interest could provide an additional financial advantage to the delayed financing path depending on your specific tax situation.

For further related reading, check out:

• Cash-Out Refinance Transactions | Fannie Mae
• What Is Delayed Financing for Cash Deals? | Chase
• Delayed Finance vs. Cash-Out Refinance: What’s the Difference?