Posted by dewCO on February 02, 2002 at 13:09:38:
If you want to get cash out of your home do it first, before you rent it.
Other than that, if it’s leased, it’s leased. When you qualify for other loans the lender won’t know if there is an option or not, and it won’t matter. It is leased, period. Until you have 2 years of tax returns to show a lender (from which they will establish the monthly income from the house by using your figures off the 2 most recent years returns) a lender will use 75% of your lease amount as the figure that off sets your loan on the property. If that puts you break even or postitive cash flow then that’s all you need.
If you are negative, then it won’t matter unless it messes up your debt ratio for qualifying for a new property. Best to go in and get yourself preapproved with a lender based on renting the house for $X per month. No need to mention the option part, it’s irrelevant, it will just be a leased property on your loan app. Obviously you’ll need to have a good idea of what it will rent for.