Are purchase or refinance interest rates cheaper?

Question

I am buying a new home and I have the cash to buy it for all cash, but I ultimately want to refinance.

Would it be cheaper if I bought it all cash and refied, or if i financed as a purchase? Or would it not matter...

Answer 1

Purchase loans are generally better. Put down 20%-25% and you can get a decent loan. Look at paying discount points to buy the rate down for the life of the loan.

It is not as easy as you think to refinance and take a large amount of cash out.

Hang on to your cash and get a loan. Find an honest mortgage comsultant, it isn't easy!

Answer 2

Wanting to re-fi in the future implies that you'll need money later. If you pay all cash now, then when you go to re-fi, it will be a "cash out" re-fi. Depending on how much you take out, it MAY come into play where you'd have to pay a higher rate. This would most often happen above 70% Loan-To-Value.

So, if you plan to take out a lot of cash later, then don't put a lot of it down now. Keep the cash you have for later. If you won't need much cash then it won't matter. If you can make more money with that money elsewhere, then that's what you should do.

Answer 3

With the limited information you have given, it is impossible to tell. It would probably be cheaper to finance from the beginning. You are making some sort of interest on your existing money.
If you have a first mortgage for 6%APR and you have CD's that are paying 4% APY you are in essence paying only 2% on the money you borrowed.
If you pay off the entire mortage and then refinance you will be paying the hidden costs of the loan originations and it will cost you in the long run.pp

Answer 4

It looks better in the future if you bought it in cash now.