Reply
Member
Posts: 8
Registered: ‎10-26-2007
0

Purchase by a Lease to Own arrangement in Florida

My husband and I are considering moving into a home owned by a very credible realtor and entering into a lease to own arrangement.  The home is in an excellent area of Florida and an area that has seen a steep drop in housing costs over the past six months.  The home is priced at $349,000 whereas similar homes are on the market for $430,000 but are clearly not selling at this price.  We would essentially put $9,000 down and pay a $1,500 rent and a $300.00 payment toward a down payment for a purchase a year later.  My question is that I read that you do a kind of re-finance when you buy a home in this manner and this confuses me as I thought we would get our own independent loan for this deal.  Can you explain the process and why it is called a refinance when we don't own the property.  Also, with perfect payments in the home along with a 10% down payment is a no-doc loan easy enough to get or have they been eliminated with the sub prime credit loan fallout?  The realtor clearly wants to unload this home and we are interested in the home for atleast a three to five year commitment.  We would need to do a no doc as I have good credit but no income and my husband has a good salary but horrible credit.  The area is Ponte Vedra, FL and the home is in a well respected community by the ocean, so we truly feel this is a good opportunity for us.  Thanks for the feedback. 
Valued Contributor
Posts: 2,385
Registered: ‎09-10-2007
0

Re: Purchase by a Lease to Own arrangement in Florida

What you are describing reminds me of an assumption (non-qual assumptions are a thing of the past - don't exist nowadays) so basically you would be taking over her mortgage at the amount of the mortgage plus some (perhaps). The same bank would hold the mortgage (so, in a way it is a re-fi for them) but you would have to qualify under that particular program.
 
The foreclosure and event he 120 lates will kill your DH's credit for a long time.  Wells Fargo has an alternative program that uses 6 months of bank statements as 'proof of income' - rates aren't great and I think it requires a min of 5% down.
 
I'll let one of the mortgage guys address the other issues.
Now a member of the UNOFFICIAL 700 Club - Plus scores of 734-734-747
Super Contributor
Posts: 8,360
Registered: ‎09-28-2007
0

Re: Purchase by a Lease to Own arrangement in Florida

No doc (no employment, income or assets) requires 20% down/equity... down the road they could be completely eliminated, I wouldn't make plans on qualifying for a product like that.  The way a refinance would work is essentially the "option price" is used as the payoff amount, you aren't refinancing, lenders just treat it as a refinance when it comes to qualifying... meaning the current appraised value can be used instead of the option price.  You need to have a recorded land contract & at least a 12 month payment history in order for it to work, and you risk the chance of that guideline being different when you go to execute your option.
 
Make sure you have the option to purchase it at the current appraised value rather than the agreed upon option price, if the home doesn't appraise out at the option price it doesn't matter what type of arrangement you've had... the appraised value will be used by the lender.
Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.