I need a hard money lender for a forclosure bailout in MN. With a FICo of 511 loan to value at 70% owner occupied Sfr. I have a full package but can not find a lender . rate is no issue in this case
A lease option gives you the option to buy the property within a specified amount of time. There is usually an upfront fee that is required (commonly called an "option fee". This fee is sometimes credited towards the downpayment if the property is purchased (the option is exercised). Sometimes a certain amount of the monthly rent is also credited towards the down payment. In this situation you are considered a renter.
A contract for deed is where you actually own the house persay. You are not on title...but when you pay off the purchase price in full to the person that is selling the house contract for deed the actual title will pass. Your monthly payments pay down the principal and interest and are not rent payments. A down payment is typically required.
Basically...to put it short and sweet...with an option you are renting until you exercise the option to purchase the property. With a contract for deed you actually own the property. Title will only pass when you pay the purchase price in full to the seller.
A lease purchase contract (also known as Lease/Option or Lease Options) is a legal document that combines a basic lease contract with an option-to-purchase contract. The tenant/buyer pays to the landlord/seller a non-refundable option deposit that is applied to the purchase price of the home.
The tenant/buyer then pays to the landlord/seller a sum that is typical to the rental amount usually on a monthly basis. A portion of that monthly payment is then applied to the purchase price of the home. During, or at the end of the lease period, the tenant/buyer has exclusive right to buy the home under the terms to which both parties have previously agreed.
_________________
In short, a Land Contract is a formal agreement in which you agree to purchase the property at a set price. You agree to make monthly payments to the seller for a certain period of time. The seller keeps the deed until you meet all your obligations under the agreement and he receives full payment. You can also claim the interest paid on your income tax.
Under normal circumstances if you make your monthly payments on time lenders take this into consideration when granting you a new loan when the land contract calls for the buyer to finance the property.
Bbagnall no problem, we all have them ( brain farts ) at times.
I think I now have a good idea of the difference between the two.
The deal on the lease option is 3k down, 1095.00 per month with 100 going toward the option, plus 1095.00 for last month rent. So total going in would be 5190.00. I guess what we need to find out if the 3k will be credited when the option is exercised. I am not sure what the numbers are for the Land Contract, but do you think the 3k is enought down on land contract on a 165k property.
I would also like to know , can you make an offer on these kind of deals, or they usually set prices.
In many ways a lease option is a better deal as far as paying down the principal instead of an amortized loan that a seller would offer on a land contract. Not required, but many do. An example is rent 600 with 100 going towards either down payment or purchase price gives you 1200 in 12 months whereas with an amortized loan for example pricipal and interest is paid over life of the loan and the principal reduces slowly in the first few years. If you really intend to purchase equity build up can be quicker with lease option. That is with payments and rent being somewhat equal over the available choices. I could calculate an example but I think you catch my drift. Get as long an option period also as you can get will work in your favor.
Everyone has left out this. On a Land Contract the seller has to file foreclosure to remove buyer. On a L/O seller only has to file an eviction to remove renter/optionee.
On a lease option sometimes even the option money is used as a reducton of price with some lenders.
Another thing to consider is that if a person has been in a home making payments on time for 2 years, and they have no recent derog (late payments) on their credit bureau, and they keep their debt to income ratios in line, then they should be able to be approved Even if they had a BK yesterday FHA
A Lease/Option can be considered that the Tenant Buyer has "Equitable Title" in the property and a judicial foreclosure is required to remove the T/B, I have seen it happen so I know this for a fact. Even if you separate the lease from the option once the T/B says he has an option the judge can rule "Equitable Title".
I always use a Land Contract and in over 500 deals never had to file for a judicial foreclosure to remove anyone from my properties that fell behind in payments, go figure.
Try Eastern Bank if after the sherrifs sale and Indy Mac if before.
Someone please reply with an answer. I need some help with this quick.
Thanks !
A lease option gives you the option to buy the property within a specified amount of time. There is usually an upfront fee that is required (commonly called an "option fee"
. This fee is sometimes credited towards the downpayment if the property is purchased (the option is exercised). Sometimes a certain amount of the monthly rent is also credited towards the down payment. In this situation you are considered a renter.
A contract for deed is where you actually own the house persay. You are not on title...but when you pay off the purchase price in full to the person that is selling the house contract for deed the actual title will pass. Your monthly payments pay down the principal and interest and are not rent payments. A down payment is typically required.
Basically...to put it short and sweet...with an option you are renting until you exercise the option to purchase the property. With a contract for deed you actually own the property. Title will only pass when you pay the purchase price in full to the seller.
I hope this helps.
rbij,
Glad to meet you.
A lease purchase contract (also known as Lease/Option or Lease Options) is a legal document that combines a basic lease contract with an option-to-purchase contract. The tenant/buyer pays to the landlord/seller a non-refundable option deposit that is applied to the purchase price of the home.
The tenant/buyer then pays to the landlord/seller a sum that is typical to the rental amount usually on a monthly basis. A portion of that monthly payment is then applied to the purchase price of the home. During, or at the end of the lease period, the tenant/buyer has exclusive right to buy the home under the terms to which both parties have previously agreed.
_________________
In short, a Land Contract is a formal agreement in which you agree to purchase the property at a set price. You agree to make monthly payments to the seller for a certain period of time. The seller keeps the deed until you meet all your obligations under the agreement and he receives full payment. You can also claim the interest paid on your income tax.
Under normal circumstances if you make your monthly payments on time lenders take this into consideration when granting you a new loan when the land contract calls for the buyer to finance the property.
John $Cash$ Locke
Bbagnall no problem, we all have them ( brain farts ) at times.
I think I now have a good idea of the difference between the two.
The deal on the lease option is 3k down, 1095.00 per month with 100 going toward the option, plus 1095.00 for last month rent. So total going in would be 5190.00. I guess what we need to find out if the 3k will be credited when the option is exercised. I am not sure what the numbers are for the Land Contract, but do you think the 3k is enought down on land contract on a 165k property.
I would also like to know , can you make an offer on these kind of deals, or they usually set prices.
Thanks !
In many ways a lease option is a better deal as far as paying down the principal instead of an amortized loan that a seller would offer on a land contract. Not required, but many do. An example is rent 600 with 100 going towards either down payment or purchase price gives you 1200 in 12 months whereas with an amortized loan for example pricipal and interest is paid over life of the loan and the principal reduces slowly in the first few years. If you really intend to purchase equity build up can be quicker with lease option. That is with payments and rent being somewhat equal over the available choices. I could calculate an example but I think you catch my drift. Get as long an option period also as you can get will work in your favor.
Everyone has left out this. On a Land Contract the seller has to file foreclosure to remove buyer. On a L/O seller only has to file an eviction to remove renter/optionee.
Something else to consider.
When your son is ready to get his own financing, having a Land Contract would give him a better chance of it being treated as a REFI.
Also, with a L/O, many lenders will treat rent credit as a reduction in price, rather than applying it towards the down payment.
Just a couple of additional thoughts I had.
On a lease option sometimes even the option money is used as a reducton of price with some lenders.
Another thing to consider is that if a person has been in a home making payments on time for 2 years, and they have no recent derog (late payments) on their credit bureau, and they keep their debt to income ratios in line, then they should be able to be approved Even if they had a BK yesterday FHA
ChrisSanDiego,
Glad to meet you.
A Lease/Option can be considered that the Tenant Buyer has "Equitable Title" in the property and a judicial foreclosure is required to remove the T/B, I have seen it happen so I know this for a fact. Even if you separate the lease from the option once the T/B says he has an option the judge can rule "Equitable Title".
I always use a Land Contract and in over 500 deals never had to file for a judicial foreclosure to remove anyone from my properties that fell behind in payments, go figure.
John $Cash$ Locke
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