Lease Option Question
I was searching the Internet and trying to find information concering a lease option and came across this site. I still have not got my concern cleared so I'm going to see if anyone here can help me. My husband and I are moving to a very small town and have found a spec house that we love. The owner is asking 8,000 more than we want to finance and can not come down. He is already losing money. We do not have a down payment due to having to take a loss on the current sale of our existing house. The owner is willing to do a lease with option to buy with us but neither he nor I really know how to go about this. We are suppose to meet in a couple of days to discuss it and I want to have a good idea of how it will work when going into the meeting. He has already had to roll the construction loan into a mortgage. His payments are $1500.00. He is willing to let us pay $1200.00 for one year and let $900.00 of what we pay go toward the asking price of the house which I think is a great deal considering what he is asking for the house is fair just not what we want to finance at this time. My concern is that after a year when we go into a purchase on the home how we still will not have a cash down payment unless somehow we can use the $10,800 that we have paid him to be applied toward the principal as the down payment as well. How can we get the bank to consider it a down payment? When doing a lease with option to buy who exactly do you contact to be sure you are drawing up the contracts correct so that you do not have problems in the wrong run. Also I read on here where people recommending finding someone that would use the appraisal value and not the loan value to avoid the down payment, however, how do find someone? Are banks usually willing to do this? Should I call our local bank that we will finance the house with and explain to them what we are doing and let them tell me what the best way to go about it will be for us?
See this post just made on this topic:
http://www.thecreativeinvestor.com/ViewTopic32998-25.html
Seems like going to a mortgage broker (rather than a bank) to discuss the future purchase/refi is in order BEFORE you do the deal, just to be sure you're covered when it comes time to buy.
You won't find many conventional lenders who look at just appraised value: it's the lower of sale price or appraised value they lend on.
Andy
You can write in the contract that the $10,800 is to be applied to the down payment at the time you exercise your option.