Option Fee Towards Down Payment
when using an option to buy a property, does the bank consider the option fee as part of the down payment when it comes time to excercise the option?
when using an option to buy a property, does the bank consider the option fee as part of the down payment when it comes time to excercise the option?
Yes, unless your Contract states otherwise. You should be able to substantiate this (if asked) by showing a bank statement indicating the deposit and/or photocopies of the money order/cashier's check.
The Contract with the Tenant/Optionee should also state that they understand it does not convey an equitable interest of any sort.
Just curious about something: what would you guys consider to be the difference between a lease/option vs. lease/purchase?.......i have heard it called both on several different ends....also, what is the most you all have ever received as option consideration on one of your lease/option - lease/purchase deals?......curious because i'm about to hopefully do my first l/o - l/p deal....thanks for any input :-D
from my limited knowledge on the topic and my self yet to put together my first deal i believe the answer to your question is that they are the same...
LO / LP same thing just different wording...
they are both a lease with the option to buy... a means of controling a property without having to physcially buying the home
hope this answers your question
All the professionals you may deal with will usually call it a Lease Purchase (agents, brokers, lenders, attorneys, etc.), so I do the same when talking with them. Lease Purchase Agreements state that you are actually agreeing to buy the property after leasing it for a certain number of months; this can also be accomplished with just a Lease and a post-dated Purchase and Sale Agreement. A Lease Option is a unilateral Agreement that binds the Seller/Optionor but not the Optionee; in other words, the Seller has to sell, but the Buyer doesn't have to exercise his Option. So, with Lease Purchase, you are agreeing to buy, and with Lease Option, you may or may not. Every well-written Lease Purchase Agreement will have a weasel clause (way out), so that essentially makes the two identical. The Lease Purchase becomes a Lease Option, and the only difference is semantics.
LeaseOptionKing, can i pick your brain one on one?
Best to ask questions here, so that others may learn.
Hi everyone,
Here is my 2 cents:In my contract
I have O C is none refundable And will
be applied to puchase price If and when
the t/b purchases the property.Have a
good day :-D
A small percentage of my clients will go conventional, and since a L/O isn't treated as a refi for them, it increases their chances of buying by having it convert to a down payment.
Some Buyers actually have decent credit (or will when the buy), and they just want to test-drive the house and neighborhood. They can get a better interest rate at their own bank. They do want the money they pay you as consideration to apply towards their eventual down payment.