L/O Screening
What type of screening does everyone go thru for their prospective tenant/buyers? Is it all about the option payment? Do you look at income and debt ratio? Credit score? All of the above? A mix? If all of the above what limits do you set?
Have my first house that I'm rehabbing and trying to do a L/O.
[addsig]
I just signed up my first Tenant Buyer. I had him fill out a lease application, showing rental history, inclome, etc. I then ran a credit, because if his score is too low, my lender may have a problem getting him refinanced. Running the credit served two purposes: 1. It gave me peace of mind 2. It assured me that we shoudl have no problem getting him into the property after 24 months, assuming his credit doesn't take a turn for the worse.
P.S. I got authority on the lease app to have the credit run, then had my lender run it for me, since they are the ones that will be doing the refi. I got that idea from another poster on these boards, it was a great suggestion, and saved me $20.
Very Good Advice!
One more thing, the payments you receive for your lease option need to be kept to assure the lender of timely payments. It usually takes a years worth of payments to satisfy a lender of a B FICO grade tenant to qualify. It may take 2 years for low scores. Your broker should tell you what you need. He is on your side in this and will lick his chops at financing the lease/option sale as well.
Ray
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