L/O Purchase w/bad credit - Posted by Bob in FL

Posted by Eric FL on March 11, 2003 at 15:38:04:

One more thing. If you are going to extend your contract, make sure to do it ahead of your deadline. Get the extension in writing and make sure you give the added option money on time and keep copies of everything.

I am sure this investor is not going to bend over backwards to help you out here as he stands to make an extra 50-60k if you are out of the property.

L/O Purchase w/bad credit - Posted by Bob in FL

Posted by Bob in FL on March 10, 2003 at 11:16:32:

I am desperate and would appreciate anyones assistance! Heres my situation; My wife and I are currently living in a home with a lease option that runs out on 7-31-03. The home is 1600SF 3/2 with bonus room, cathedral cielings thru-out, covered patio, new tile and carpet and, lake view across the street. The lease option we have states the price is $97,500 with payments of $850.00 for 1 year. The lease is renewable after 1 year with an additional 2K down and a 5% increase in the purchase price. I did put 10K down towards the purchase which brings the price down to $87,500. This money came from the sale of my last home. This is a awsome deal! We have made some cosmetic improvements such as paint and landscaping and in my search for financing the past few months I have had 2 realtors tell me that the FMV is 150K. I also had an appraisal done in November that came in at 135K. The problem is that I do not qualify for a loan. I have answered adds I see in the paper and on the net and I’m afraid that all those inquires have brought my credit rating down even more! We realise that we have made some mistakes in the past but nothing in the past 3 years and even with 10K already in place does not seam to matter. The owner will not budge from the agreement we signed so he will not carry and paper. We want desperatly to stay but it doesn’t look posible. Both of us have good steady jobs,. Last years income was over 50K combined. I do not have the 2K to extent the lease so if we leave in July, I’ve lost my 10K also! This past weekend I put an open house sign out front just to see what would happen. Several were interested and have come back a second time to see the house so I’m sure I could sell if I have to. The L/O states that I cannot sell or assign the contract but can I do a double closing without getting a mtg. myself? The title co. tells me yes but I need the owners approvel. (I have not asked him yet. He is not the most cooperative person I know and I want to have all my ducks in line before I talk to him. He knows RE very well.) We figure if we do nothing with our credit for a few years it will repair itself and then we would qualify. From what I’ve read on this site we should stay away from repair services. I am very frustrated and stressed over this whole matter. It keeps me up at night. Can anyone assist with financing or selling? Thank you in advance for any advice…or just listening.

Re: L/O Purchase w/bad credit - Posted by Eric FL

Posted by Eric FL on March 11, 2003 at 15:36:29:

You should be fine. You are still in a pretty good position.

Find a lender that will do a l/o refinance. There are even some here on this board I have seen before. Email me if you can’t find one and I will give you the guy I use for my sub2 and l/o deals.

Worst case, come up with the 2K to extend the lease and raise the purchase price to 102,375. You will then have 12k down on the deal making it where you have to come up with 90k for a home valued at 135k. Unless you have a 100k tax lien on your credit, I am sure you can get a mortgage on this without a problem.
You will probably be paying high interest rates, but that is better than losing 12k of your cash and 45k of total profit.

Also, seeing that you put 10k down, you should be working towards improving your credit.

Good luck

Re: L/O Purchase w/bad credit - Posted by GMann

Posted by GMann on March 10, 2003 at 12:54:35:

You can do a lease purchase refinance. Basically if you have lived in the home for 1 year, you can do a refinance instead of a purchase money loan. That means no down payment. Call a local mortgage broker and they can help you. The key to lease purchase refis are cancelled checks or money order recpts. I hope you can get copies. The broker will ask for the last 12 to prove the mortgage/lease history. There are a few lenders that will do it without canc. cks or money orders. If the broker doesn’t know about these investors then tell them to shoot me an email.

This shouldn’t be a problem to close. The loan to value is