Financing And Closing Lease Options In NC
This is my first Sandwich L/O and my TB are ready to buy after only 6 mo....and want to use their aunt who is a Loan Officer for a Bank. I am worried about seasoning issues that she wont be able to handle and her ablilty to possibly influence an appriasal to come in at below the purchase price......am I right to worry?.....can anyone recommend a Mortgage Broker who handles sandwich lease options and gets around seasoning without paying higher interest rates? ....also anyone who has done double closings in NC....Thanks for any suggestions!
Kathy,
Don't worry about the LO influencing the appraisal to come in low. As long as the borrowers have the ability to pay, and the FMV is high enough, it is in the banks best interest to loan more, not less. Regardless, if it does come in low, they can continue to lease, and exercise their option later, or they can simply not exercise their option, and you get to keep the option fee, and collect again from another TB. Buying on a L/O you expect to pay a little more. As long as your strike price isn't unreasonable, you should not have a problem.
If your seller knows exactly whats going with your sandwich L/O then you should not have a problem with your seller paying you a consignment fee, which is the difference between your negotiated buying price from the seller and sellling price with your tenant-buyers. Thats another option to get around the double closing if that was your concern.
Thanks for the 2 suggestions
I am not tough enough to tell my TBs' that if the house doesnt appraise that they can walk away....The price of the house is probably 5 to 8k over what comps are listing right now....I thought they would be in the house atleast a yr but they always have the option to buy early....Maybe it'll appraise out just dont know and am nervous about it......
Dumb question I know but....do I need to make sure the loan officer (aunt) knows I dont own the house and will do a double closing on closing day? My TBs do know that but Im not sure when the banks actually figure that out.....when they do a title search?......
This may turn out to be tricky because your profit is on the table and you are not the owner of the property.
Title seasoning is also tricky because lenders want to see time. We encountered a refi-issue on title seasoning when requesting cash out on a fixer upper. The lender wanted to use the original appraisal verses the revised which included the improvements. Our broker was SHOCKED at the lenders remarks. In his opinion, the banks have been burned on inflated "short term" appraisals.
You need to review your exit strategy and explain to the loan officer your situation.
[addsig]