Problem in gettting funding - Posted by Chas Bryant

Posted by a. gilliam on March 23, 1999 at 08:55:41:

are there any negotiation tactics i can use to negotiate lease options for both home and commercial investments

Problem in gettting funding - Posted by Chas Bryant

Posted by Chas Bryant on January 27, 1999 at 19:48:20:

I have try to find a loan from a bank and also
a mortgage company and thru a broker. And have
been turned down because of bad credit. I am
currently employed my spouse has been on her
job for over 9 yrs we both have major credit cards.
Never late with our rent. But we have to get a mortgage.
I would like a referral to any banks are mortgage companies
in the state of ohio who would lend us money for a house

Here are the basics - Posted by Baltimore BirdDog

Posted by Baltimore BirdDog on January 29, 1999 at 16:25:51:


Lease/Option? Seller financing? What? Huh?

I don’t mean to insult your intelligence, but just in case you don’t know what some of this stuff is, here’s a quick explanation:

Basically rent to own. Under a lease/option, you give someone a few bucks up front (called option consideration) for the right to purchase the home when the lease is up. During the term of the lease (normally a year or two), you live in the house and pay rent. A portion of that monthly rent is usually credited by the landlord toward the down payment needed to buy the house when you eventually buy it (e.g. $200/mo credit for 12 month lease = $2,400 credit). At the end of the lease, during which you build your credit and save for a down payment, you get your own financing from a conventional lender and buy the house. Key points:

  1. Make sure your eventual purchase price is fair. Any Realtor should be able to give you a comparative market analysis (CMA), which shows recent sale prices for similar houses in the area.

  2. Make sure anything that you pay in rent which is above average for a comparable house is credited toward your down payment (i.e., area rents are $600, you pay $700, you want to get credit for $100/mo toward your down payment).

Seller Financing/Seller Carryback:
This is just like it sounds, instead of the bank giving you money the seller does. But wait! The seller doesn’t have money, he has a house. What to do? Just like you would give the bank an IOU in the form of a mortgage note saying that you’ll pay back XX amount at XX interest rate for XX years, you give the seller a mortgage note outlining how you will pay him back after he gives you the house.

Seller Second:
Often someone in your situation will ask the seller to take a second mortgage for their equity. Example:

$100,000 house
-Bank will lend you $80,000 (80% loan to value)
-Seller takes IOU for $20,000
-In order of priority in the event you fail to make the payments, bank gets paid first, seller gets paid second.

This just means that the lender wants to see a good record of payment for at least 12 months. Your rental payments over the term of the lease should prove that, as long as they’re on time.

The other posts give good advice, especially SCook85 and DJ (not DJ Busch). Find a mortgage broker who will work with people with less than perfect credit. Ask them questions. If it doesn’t seem like they know what they’re doing, they probably don’t. Any good broker should also know about the wide variety of low down payment and low interest rate programs offered for first-time home buyers.

One thing to remember, any Realtor you deal with will be acting on behalf of the SELLER unless you specifically hire them as YOUR broker (i.e., sign a buyer’s broker agreement). Remember that the agent will be acting to get the best price for the seller and be careful what you tell him/her. Don’t blurt out things like “We love this house and will pay $10,000 more than the listed price.” Anything you say to the Realtor, you say to the Seller.

If you have any other questions, feel free to e-mail me and I’ll help you as best as I can. Good luck!


Re: Problem in gettting funding - Posted by DJ (not DJ Busch)

Posted by DJ (not DJ Busch) on January 28, 1999 at 07:40:18:

Both Mr.Busch & Mr.Cook have good ideas. Of course, the best place to start is trying to go around a bank if possible. This way, you make the rules instead of the bank. On the other hand, if you need a mortgage for credit purposes, try calling around to Non-Conventional Lender/Brokers. They specialize in B,C & D credit. Some of them will even go up to 95% LTV, depending on your situation. As Cook said, the best route, would be to obtain a Lease Option or owner financed note. A non-conventional lender will
let you purchase the house after 12 months as a refi, as opposed to a purchase loan, usually with no money down. The 12 months is considered seasoning, which all lenders look at strongly. Make sure to pay all of your monthly payments on time, and pay with a check, so you will have a record of it. If you have a little cash, you can prepay a few months in advance for some instant
seasoning. If you can’t find someone to help you, let me know. My wife’s a broker, and depending on where you are, she may be able to refer you to someone. She has alot of contacts in the industry. Good Luck!

Re: Problem in gettting funding - Posted by SCook85

Posted by SCook85 on January 28, 1999 at 24:32:47:

I have to disagree with DJ a little bit here. Most of us here who are buying and selling homes know an awful lot about conventional mortgages. We have to, we sell homes to people who need them. There is nothing wrong with a conventional mortgage especially for your own home.

The best thing that you have going for you is that you pay your rent on time. There are companies that do what is called credit blending. If you pay your credit cards on time but have some bad consumer credit you my get rated a B or C for consumer credit. But if you pay your rent on time you can get an A for that. This leaves you with and average of A- to B. The right lender should be able to get you done. Do you have down payment money or a flexible seller that would hold a small second mortgage. This would also help. You won’t get 7% rates but more like 9-10 is what you would have to expect for now.

Sorry I don’t have the names of any companies but keep trying brokers. Find one that specializes in sub-prime and go from there.

I would also consider a Lease option if I were you. Over the course of the next year you can get everything cleaned up and get a mortgage then.


Barking up the Wrong Tree - Posted by DJ Busch

Posted by DJ Busch on January 27, 1999 at 20:49:51:


I don’t want to seem like a smartie pants, but asking creative investing professionals how to obtain conventional financing will get you about as far as asking an insurance salesman to recommend a good running shoe. Sure, once in a while one of those salesmen will have an answer, but his area of expertise is insurance.

These folks’ area of expertise is being creative. There are oodles of people here who wouldn’t even think of going to a bank to get money. The thought just doesn’t cross their minds.

I recommend reading Joe Kaiser’s article, “No Cash or Credit Needed” in the “how to articles” section of this site. If you’re anything like me, it will open your eyes. There are so many creative ways to finance a deal (even for your own residence) that it seems foolish to commit yourself stubbornly to conventional financing…the old humdrum…same old same old…etc.

Take a look around this site and you just might find that creative spark that helps you get into your home without so much as a glance at your credit report.

Hakuna Matata

DJ Busch