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Mortgage, refi, or delayed financing?

Hello, this is my first time posting to this subreddit and I’m hoping you very smart folks can advise me. (I've also posted this to r/personalfinance, but not receiving many replies there.)

My husband and I just had our offer accepted on a house in an extremely competitive HCOL market. Initially, we were planning to pay all-cash and then refinancing, but our accountant told us that we wouldn’t able to deduct mortgage interest payments from our taxes, so we switched to downpayment and traditional mortgage.

We were pre-approved for a jumbo mortgage with a large, national mortgage company, however when it came time to officially apply for the mortgage we were informed that because he is considered self-employed/contractor they would only be considering the three months he earned money in 2020 (he started in October 2020.)

He works for a startup in the EU and they are in the process of forming a C-Corp the US in order to pay him as a W2 employee. He’s been invoicing them every month and being paid via wire transfer since they have no ability to pay the required federal or state taxes. They consider him a FT employee and have set his salary. This was all explained to the mortgage company ahead of being pre-approved. We are now being told we can get a mortgage that’s $250k smaller than we wanted based on my income. (I admit this was our fault for not doing more thorough research ahead of this.)

We’ve paused the process with them and have started an application with a local credit union. The difference in assistance has been like night and day. The large mortgage company was recommended to us by our agent, but they’ve been less than helpful or thorough. Our local credit union has been fantastic thus far. She has answered all of our questions and concerns and has already written up an exception letter to give to the underwriter. Now, all that and it still may not matter. So, onto my questions.

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  1. Do we just go with the smaller mortgage and pay a higher downpayment? We’d prefer not to do this, as we want to keep as much cash in reserve as possible.
  2. Do we pay all cash and then refinance? What are the implications on our taxes if we go this route?
  3. Do we try for delayed financing? Is there any difference between this and refinancing?

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We are first time homeowners, so please be kind, we know we have not had an ideal process here. This whole affair has been stressful, rushed, and utter bananas. Thanks in advance!

submitted by /u/zootgirl
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source https://www.reddit.com/r/RealEstate/comments/pf7z8u/mortgage_refi_or_delayed_financing/
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