Subj To "Buyer Refinance ?"
When a T/B wants to exercise an option to purchase.......if possible do they refinance the existing mortgage in their name or do they have to go through the lender process all over again.
Does John Locke cover this issue in his training manual?
Also do anyone here participate in any gift programs(down payment assistance like the Hart Program, etc) to help buyers pay your asking price. If so what are the advantages and disadvantages.
The tenant buyers (I'm assuming you're talking about lease options) will go get their own loan which will pay off the existing loan on the property.
pdcoles,
John Locke's Subject To technique does not use a lease option exit strategy, so he is not dealing with a tenant-buyer and there is no option agreement. Instead, John sells on a Contract for Deed.
A Contract for Deed is an installment sale where the seller holds title to the property. Because the buyer is not the titled owner, the buyer does not "refinance" here; instead, the buyer obtains a new purchase money loan to satisfy the contract.
One of my buyers used the Nehemiah program to purchase one of my properties. The otherwise creditworthy buyer was cash poor and wanted to use an FHA first-time buyer loan program that permitted downpayment gifts. I did not see any particular disadvantage to participating in the program if I were going to help the buyer anyway. The advantage to the buyer is that they can often make the monthly mortgage payments, but may not have the cash reserves to make a downpayment.
DISCLAIMER: I have John Locke's 2002 version of his course, and I have seen the 2003 version of the course. John has recently updated the course, and those updates are now included in the 2004 version of his course. I have ordered his new course, but have not received it yet. John may very well include a discussion of lease-options as an exit strategy in the new course material. [ Edited by DaveT on Date 12/19/2003 ]