Bought home with cash crazy fast -- Mortgage next?

Mortgage
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Life has been overwhelming so I’ve been on hiatus for over a month.

This week was just nuts – we bought our first home in six days.

I saw a loft in Cupertino by the Apple spaceship on Monday and based on pictures and disclosures alone (I missed the weekend showing) I submitted cash offer 10% over asking plus six months free rent based on information from an Open Listings advisor and my cousin who wrote up the offer for us. Tuesday, 09/12 5PM deadline.

I preferred to stay away from Cupertino – I’m Chinese from Vancouver and I want to stay away from way more Chinese – but I like lofts and my wife’s commute to work in PA would be 15 minutes with traffic. HS is Monta Vista so that was a big plus.

I had a feeling I needed to offer another $100k but my wife refused. Based on comps in the building, three 2017 sales within past few months, and very little reported offers on each (two or three) my wife thought we were doing the owner a favor offering cash. She was SO wrong.

The listing agent reported 16 offers and ours was not accepted. It’ll be interesting to see what the transaction closes at.

On Friday afternoon, a listing popped up and for a property in North Los Altos which was perfect for our family. We viewed the home in the evening and submitted a preemptive cash offer above asking, free rent, no contingencies and 10-day close. The listing agent had told my cousin another buyer agent had personally delivered an all cash offer earlier in the day. An Open Listing advisor relayed this to me when I asked for disclosures.

Our offer was accepted Saturday just before the open house. Thankfully our offer came out on top. We paid a premium but I’m glad the money is going to a senior who’s moving into a retirement home and who will benefit from it.

To raise cash for this purchase, I had to sell off our tax-exempt bond holding (VCLAX), REIT Prologis (PLD) and raid most of our cash accounts including a savings account we funded for our daughter.

After closing this home purchase, can I borrow against the equity we own in the paid-off home to replenish the investment and savings accounts I raided? If yes, since I am not taking a loan from the home equity to finance any improvements to the property is the mortgage interest still tax deductible?

Is there a waiting period after closing a home purchase before I can take a mortgage against the equity in it? Furthermore, are the interest rates higher for these types of mortgages?

Sorry for the rambling. Thanks in advance for your advice.

2 Likes
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Houses near Apple Park doesn’t go to MVHS. They go to Cupertino HS, Fremont HS, Adrian Cox HS and Santa Clara HS. Well, it depends on what is meant “by the Apple Spaceship”… how near is “by”?

My house is within 0.6 miles from Apple Park and I don’t think it is “by”.

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Yes, you can do a cash-out refi on the house. There is usually a seasoning requirement of a couple months I think.

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I would suggest you PM @cloud for his contact at US Bank and simply lay out your situation with him. Wouldn’t hurt. Not sure you saw our discussion on a 1031 exchange thread. US Bank is running a promo equity line for 1.99% for 6 mo.

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Or, can’t you just go get a 1st mortgage like what a lot of people do after paying all cash for a place? That is what I plan to do and lock in what should be still a decent rate.

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Ok, thanks for the advice!

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Not to argue with you hanera because you are a seasoned guru…

Here’s the listing to the property: 10745 N De Anza Blvd #308, Cupertino CA

For all the units in this development, Monta Vista is listed as the HS. It was in the disclosure too from what I remember. But I guess it’s always to be verified by the buyer.

We lost out to some other better offer so it’s moot now.

1 Like
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So would the mortgage interest be tax deductible given that I am not using the funds to make improvements?

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I already guess you’re referring to this place… about 1 mile from Apple Park (Spaceship). Apple Campus is across the road. The description says Apple Computer main office, which is correct because Apple Campus is still the main office till Apple Park is officially open.

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Hi fellow Vancouverite! And congrats on your purchase. As others mention, you can definitely do cash out refinance. I would recommend that over taking out HELOC since you got to lock in lower interest rate. I did a cash out refinance with US Bank once, and their interest rate was quite comparable to regular market rate at that time. PM me if you need a referral.

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Congrats.

  1. Is it really possible to commute to PA in 15 minutes with traffic? 280 corridor?
  2. I have found refi appraisals to be vastly different from purchase appraisals. They are likely to come in lower.
  3. Seasoning is typical, but varies by lender. Interest rates differ, but there is more variation in the rate you will get from different lenders than from a purchase vs refi.
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You don’t have to use the money on home improvment for the interest to be deductible. It’s deductible no matter what the use (up to $1M loan value).

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I am not a tax expert but the interest on the cash portion of cashout refinance is only deductible for the first $100,000. Please refer to this sentence in the following link:
“If you cash out more than these allowed amounts, you cannot write off the interest paid on the excess”.

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@punchitchewie,

Congrats !

Yes, you can do it. The lending rule is like this: If you get the property with cash offer and finance it within 90 days of closing, it is considered as original financing (not refinance nor cash out finance) and you will be getting the same benefit of low rate as if the original lending. Only issue is they will match with 80% of appraisal amount for financing. If you have purchased higher cost, you can not expect lender gives 80% of purchase price.

Check with John wheaten (BOFA) - a member here - well known for his RE finance knowledge. You can start early too. Early paper work helps you a lot.

[edited] Long time before (that is why rates are old), I Checked with my reference at wells fargo (you can reach out him, if you like), his reply is here. He is 100% trustworthy person as he has helped me financing many properties for me and my friends.

finance_after_purchase
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So would the mortgage interest be tax deductible given that I am not using the funds to make improvements?

Yes, it is tax deductible.

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You can do a delayed financing, it’s the same as purchase mortgage, sometimes slightly worse

Congratulations on north Los Altos purchase. Is it a sfr or loft？

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That CU condo should be in Monta Vista HS, since it is south or I-280. It is close to Apple’s old headquarters, but not new headquarters.

Also North Los Altos is better location than Cupertino for commute to PA. It will take much longer than 15 minutes commute from DeAnza to PA, unless your wife’s work hours are at off peak times. So probably a good that you got the LA property.

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This home is sold for 1.135M

https://www.redfin.com/CA/Cupertino/10745-N-De-Anza-Blvd-95014/unit-308/home/18972193

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What’s an Open Listing advisor?