Lease Option

djlilt · Joined: 20 Jun 2007 Posts: 1

Hello I have a question about financing a lease option. I got involved with one of these programs where you pick any home on the market and an investor buys the home for you. You sign a 2 year lease and over the course of the 2 years I have to work on getting credit issuse straight. When it comes time for me to excercise my exclusive option to purchase the property I have to buy it back for 10% over what the investor paid for it. My question is about the financing part, When it comes time to get financing I have been told that alot of lenders will look at my last 12 months of on time payments and It will be treated as a refinance, is this true and if so will other problems with credit hold me back from getting this house into my own name. I just feeel that I jumped the gun too soon and I should have stayed renting an apartment that was 800 dollars less a month, That way I could actually pay off all or most of my debt in 2years and go get financing on my own. My payments on this Lease/option are pnly allowing me to chip away slow at my debt/credit rebuilding. But the plus to that is Im making my "mortgage" payments ontime each month so will that be more of a factor or do I still need to work on paying off all this debt and raising this score more.

Oh and I am looking at getting 100% financing when the time comes

harisrealty · Joined: 01 Jul 2007 Posts: 10 Location: Florida

Well its a good thing you are paying your mortgages on time. Another thing is i had a recent client who had been living in a property for 2.5 years, they werent owners, they were leasing from the owner.BUT they made payments under their name to the mortgage company, which allowed them to quitclaim themeselves on the property so they can obtain ownership, and when the 2 years is over for you, you can actually refinance, but i would make sure you were quitclaimed on the property and the investor or company you agreed to do this lease option with allows that. There are people that do their dirty work as well, so get advice from a lawyer as well, his $500-$1000

harisrealty · Joined: 01 Jul 2007 Posts: 10 Location: Florida

Well its a good thing you are paying your mortgages on time. Another thing is i had a recent client who had been living in a property for 2.5 years, they werent owners, they were leasing from the owner.BUT they made payments under their name to the mortgage company, which allowed them to quitclaim themeselves on the property so they can obtain ownership, and when the 2 years is over for you, you can actually refinance, but i would make sure you were quitclaimed on the property and the investor or company you agreed to do this lease option with allows that. There are people that do their dirty work as well, so get advice from a lawyer as well, his $500-$1000 fees will save you alot more money and let you know exactly what way you have to go about that.
I hope that helps, if at all it is the similar case as to my clients.
If I misunderstood you, let me know and i will get you a better response. thanks

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

From my experience, yes this is allowable, but most of the time this is on a high-risk (meaning high-rate) loan. If you want to stay in the realm of normal level interest rates, you'll need to be on the title for 12 months.

A lease-option is not ownership, it's just you living in the residence and paying money to someone to live there. If you haven't had recorded (at the county) ownership for 12 months, you're probably going to run into some troubles as far as the refinance side.

That being said, it's not necessarily better to do that anyway. If it's a lease-option, you may not *want* to buy it at 10% over what he paid for it, as it may not even be worth it now (depends on your market of course.)