L/O Rent Credits - Lender to decide what is allowed? - Posted by Brandi_TX
Posted by Brandi_TX on May 20, 1999 at 11:25:51:
I have been talking to mortgage companies, trying to figure out how they can assist in pre-qualifying any Tenant/Buyers I get signed up on a L/O.
The information I am getting does not sound like anything I have learned here. (Go figure, Right?)
Anyway, here’s the problem:
When giving rent credits to my buyer, I understand that the total rent is usually over market rents, and that the credit is ideally minimal. According to the mortgage companies - the rent credits I negotiate with my buyer DO NOT MATTER unless they are over market rent. Example:
My option:
100k FMV
90k option price
700/mo rent (market rents (800)
350/mo credit
500 consideration
T/B option:
105k option price
900/mo rent
200/mo credit
3k consideration
From what the mortgage Companies are telling me, only 100/mo will be allowed to be credited to my T/B because their rent was only 100/mo over FMR. If this is the case, what is the point of offering rent credits at all. This, in my mind, gives less flexibility.
An even worse case would be if I wanted to excercise my option by getting a new loan. In that case, I would get NO rent credits because I am not paying over FMR. What a rip.
Having never seen this on the board, my guess is that I am missing something. Is it to be worded that the credit is to be applied to the purchase price instead of the downpayment? If so, the T/B would still have to come up with a down payment when if they excercise, wouldn’t they? Please folks, enlighten me… the bulb is growing dim.
Thanks,
Brandi_TX
*** Disclaimer *** I am from Texas, any info given by me pertains to what I know from Texas resources. All information should be verified with reputable people in your own area. (LMAO - just thought I would throw that in there! Have a great day!)