L/O Buyer Financing

Hi,
I am totally new to this and have been reading the boards for a few weeks now. I am leaning towards doing L/O's but the one question I have that I can't seem to find the answer to is....
When it is time for the L/O buyer to purchase how do they get financing? It appears this option is for people with little, no, or bad credit so if they can't get financing in the first place to buy a home, why would they all of a sudden be able to get financing 12-24 months later? Thanks for your help....

Comments(2)

  • classimg26th February, 2004

    Great question! The L/O is to a buyers benefit because it can reveal a payment history to the (future) inquiring lender. Yes, the credit clean up is necessary but for the sake of the mortgage payment, a strong house PAYMENT HISTORY is invaluable to those with poor credit.

    As the landlord, you should become involved and assit them, with the help of a mortgage broker, to prepare for the future financing.

    Eric & Rosa
    [addsig]

  • jfslenes1st March, 2004

    If you've structured the LO in your favor, a part of each lease payment accrues to your benefit as equity. That combined with the clean payment history could get enough downpayment and FICO to qualify for the needed loan.

    If you have that bad of credit or income you need to anticipate that situation 12 or 24 months down the road. Build some financing into the LO. Refi 75% or some number and the seller carries the balance on specified terms.

    It is essential for your LO success to carefully think thru all the varied details now, during the lease, and at the ultimqted purchase close date. As H. Ross Perot said, the devil is in the details!

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