Remembering my first lease purchase client is not difficult at all. Sitting at my desk as a somewhat experienced Senior Loan Officer with nearly four years into the mortgage business, things were starting to shape up. A client with a portfolio of lease purchases had phoned me by referral. They needed to assist a borrower whose lease purchase contract was about to expire. Knowing little to nothing about processing lease purchases, the client was informed our company would be happy to assist the best we could. As with any other borrower, 1003 (ten O'three), credit score validations for program pre-quas, choice of lenders, order title work, etc. Just to mention some things about this clients' business with lease purchase homes, they helped people who had employer emergencies to relocate. They validated all relevant information with the employer, had the borrower meet with an attorney to sign documents granting them permission to control the new of the property, and the company went on with power of attorney to locate a buyer.
This is what was discovered. A lease purchase can be a synonymous mortgage term for seller finance, refinance, private note, or rent-to-own. These terms identify to a mortgage banker the variations of lender programs that may qualify to close this type of mortgage transaction. Okay, so what I'm wearing my stripes on my sleeves right now telling you how a boss got down with it in the investment mortgage game when it came to processing seller finance deals. Understand, that this type transaction comes with seasoned liquidity already fulfilled within the seller's sales contract.
- Buyer/ borrower had been renting the property nearly two years (2 yr expiration time)
- As a good lease purchase contract should, there was monthly credit accumulated at like 15% of the mthly pymt amount.
- This means the mortgage broker has to consider (a)down pymt, (b)24 month mthly accumulation credit, (c)subtract that from the contract sales price, (d)consider if seller is paying something towards buyer closing cost lender allowed, and (e)all of this is done to determine what is the remaining balance owed to the seller so you get it.
The reason details were given is to help all understand the qualifications needed to close this mortgage transaction is similar to those on a refinance, dept consolidation loan, seller finance, mortgage purchase, private mortgage, or rent-to-own. Yes, these all have very similar structure patterns when closing these on a mortgage loan program. Mortgage brokers please check the banking regulations before proceeding in your particular state. This site does not give legal advice. I have shared with you my own experiences as an investment mortgage specialist who worked with many real estate investors over a decade in mortgage banking.
To Your Success,