Proof Of Sale Question
Scenario: Bob has bought a new house but it is contingent on the sale of his current home. I come along and agree to buy it subject to or lease option, whatever is better, I'm still learning these. What do we have to do to show Bob's new lender for his new house that his current residence is sold and he is no longer responsible for the payment so it doesn't affect his debt ratio so he qualifies. I would like exact specifics if possible.
DaShow,
To give you exact specifics we'd have to be the lender the seller is using.
They won't all accept the same things.
When I close a sub2 deal, the seller gets a copy of the purchase and sale agreement, any addendums and a HUD-1 closing sheet.
This works most of the time, provided the seller is credit worthy enough to get the loan otherwise.
Sometimes the new lender will require proof that you are making the payments......something that cannot be done until you've done so, obviously.
If the seller comes back a few months later, saying they need proof beyond the HUD-1 and agreement copies, I often provide them with copies of cancelled checks that were made out to the mortgage company.......showing I'm making the payments and the seller is not.
Aside from that, there really is nothing else you can provide, without crossing a line of legality.......which I NEVER do or advocate.
What I mean by that is providing false paperwork.
Some investors and mortgage brokers will ask the seller to provide a lease or agreement for deed to show as proof the debt is being covered.
Like I said, not a good idea.
anyway, HTH,
Jim FL
[addsig]
You're all over my questions Jim, appreciate it! Another question though; how does the lender know if you purchased the house subject 2 or otherwise, and where are you getting the HUD from. I'm a mortgage broker and I get the HUD from the lender, but how can a private seller/buyer get one?
dashow,
No problem, when the phone rings off the hook in my office (a good thing), I often put on headphones, and type away online.
Anyway........
You asked:
"how does the lender know if you purchased the house subject 2 or otherwise?"
REPLY:
First, take a look at any HUD-1 form, linces 203 and 503........"mortgages taken subject to".
Plus, the way the deal breaks down on a settlement sheet, its fairly obvious as to who got what in the transaction.
Next you asked:
"where are you getting the HUD from."
REPLY:
I could be a smart alec and tell you what I sell includes one........but I won't because you can get them FREE all over the place.
Many folks have them online for download, both fillable, and non-fillable, .pdf format, MS word, and MS Excel.
I use an Excel version, just because its easy to use.
Do a google search for FREE HUD-1 and you'll find plenty.
HUD offers one, Bronchick had one for a while, and a few sub2 courses included them as well.
I fill out my own when buying sub2, and closing with just a title search at the house, but will have my attny/title company do them when we close there.
Either way, it is fill in the blanks and not hard to do.
Does that help?
Take care,
Jim FL
[addsig]
Just did a sub2 deal. Do a google search and you will find a HUD-1 Sheet.
It is a lot easier to provide a lease, and it can be done legally! You must be a creative investor.
Seller sells to Buyer.
Buyer leases back to Seller (sale-leaseback)
Seller sub-leases to Tenant
[ Edited by roboxking on Date 10/17/2004 ]