Sell Sub2, Then Buy New Home Conventionally
I've read bits and pieces of the answer to this question but I was hoping to get a definitive answer.
I am buying a house sub2 in which the seller is going to immediatly go to buy a new home.
I realize that the requirement to show that the payments are no longer the obligation of the seller vary by lender but what is most common?
THANKS
myfrogger,
This is something you will deal with once in a while if you buy enough houses sub2.
The way I always handle this is to simply provide the seller with a copy of the purchase and sale agreement, along with a HUD-1 settlement sheet showing the transaction has closed.
I'd say this will suffice about 80% of the time for new lenders.
However, the other times, the sellers might need you to show proof of making payments, like cancelled checks etc.
Since this is a newly signed deal, that won't be an option.
try the HUD-1 and agreement route, and if that fails, ask the lenders underwriter for the sellers new loan what they want to see.
A letter on company letterhead explaining that you are now running the old account, and the seller is not responsible for it, because you own the house also might help.
Remember though, the sellers must be credit worthy in the first place, so in all likelyhood, IF the sellers get denied for a new loan, it will have nothing to do with your purchase method of the old residence.
HTH,
Jim FL
[addsig]
Or you can simply give them a copy of the lease for whomever will be living there to keep their debt ratios in line. (Which I'm assuming is the problem in some of these cases)