Lease Option / Finance - Posted by Rich(WI)

Posted by BillW on February 24, 2001 at 08:41:00:

Rich, You’re not looking at the financing situation the right way. The expectation is that at the end of the option period, the property WILL be worth as much or more than the option price. With a credit for the option fee, many lenders have loan programs that will allow buyers to close with low down payments. FHA and VA as well as many conventional loans are often done with 5 percent or less down. This 20 percent down you are talking about is simply not a requirement of many loans. Also, when you put a buyer into a property on a lease/option, you should , hopefully, make sure that they make or will make enough money to qualify to refinance out at the end of the option term.

Lease Option / Finance - Posted by Rich(WI)

Posted by Rich(WI) on February 24, 2001 at 04:34:01:

Many people on this site seem to lease/option to a buyer for more than the house comps at. For example:

90,000.00 Comp
100,000.00 Lease/Option to buyer
5,000.00 Option Fee
95,000.00 Balance

So when the buyer is going to cash you out (95,000.00), won’t they have to put up an additional 20% for the bank? Or do you always take back a 2nd? And, won’t the bank take into consideration the 2nd on debt to income ratio for the buyer?

It just seems to me that when I look at the numbers, I would be putting the buyer into an almost impossible situation.