Financing in 30309>Question Details

escynce3, Home Owner in Atlanta, GA

Owner financing and refinancing

Asked by escynce3, Atlanta, GA Tue Jun 26, 2012

I am in a owner finance deal. My term is about to expire. Is there financing available to me?

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Rodney Mason’s answer
I am not clear if you are the owner doing the financing or the buyer looking to finance the purchase. In order to do a refinance, you name has to be on title now. If you are purchasing the property and not currently on title, then it would be considered to be a regualr purchase transaction.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing
0 votes Thank Flag Link Wed Jun 27, 2012

This is a scenario I discuss with borrowers all the time. Many are in lease/purchase arrangements. The key question that must be answered is do you truly own the home? In other words, whose name is on the deed to the property. If it is yours and the former owner has a private mortgage that you are paying on, then refinancing is certainly option as Kim mentions in her answer.

But the term "owner financing" suggests that you may not be the owner and the actual owner of the home is still on the deed to the property has his own mortgage. If this is the case, then this would technically be a purchase of the property since the current owner is transferring ownership interest to you.

In this case, you will be treated as a "buyer" and would be subject to the normal requirements of a down payment, sufficient income to qualify and good credit. There may have been a provision in your lease purchase agreement that allocates a certain amount for down payment from your monthly lease payments.

I may be able to assist you and welcome your call or email if you need further guidance.

Timothy Brown
LPO Manager | Evolve Bank & Trust
11605 Haynes Bridge Road Suite 125| Alpharetta, GA 30009
678.468.5626 x110 | fax 678.935.1156 | cell 678.467.9959
NMLS#: 168281
0 votes Thank Flag Link Wed Jun 27, 2012
The process is very similar to a regular refinance. Typically a lender will want to see a mortgage history showing on time payments (12 months of mortgage payment history), and may also want to see the original closing documents. Your cancelled checks or bank statements should take care of this issue since in all probability the owner is not reporting your payments to the credit repositories. ... If you have been paying your monthly payments when due you should not have a problem.

Everything else will be the same as a regular refinance. If your credit score is high enough you could qualify for a conventional loan, if your credit score is lower you may still qualify for an FHA loan.

When it's time for you to refinance your Owner Financed home, you will need to qualify for your new home loan. I can point you in the right direction when the time comes!

A good credit history, a stable income and a good home equity balance are three determining factors whether or not you can qualify for your new home loan.

Before you can successfully refinance your Owner Financed mortgage, lenders usually need to evaluate whether or not you qualify for the said loan. Expect them to go through your credit records, ask you for supporting documents to prove your financial capability, your income, and your collateral. Hopefully, during your Owner Finance term, you have done everything in your power to get your finances and credit on track. Here are some guidelines to help you determine whether or not you qualify for home loan refinancing.

Your credit history....
You should probably know that your credit history has a lot to do with loan approval. If you intend to get a home loan refinance anytime soon, make sure everything about your credit rating is in order. The better your credit history and rating is, the easier it can be for you to get approved, more so to get a good interest rate. Do not get the wrong idea though. People who have poor credit histories may still get themselves some refinancing, but the interest rates can be relatively steep.

If you are planning for a home loan refinance anytime soon, it should also be a good idea to get a hold of your credit reports. Find out how you stand as of the moment, and look for ways to improve your current records. Try to come up with a means to pay your credit card debts, avoid new loans, and pay off all the smaller debts. Do not open a new credit card account, no matter how tempting it would be, as it can only add more to your financial burden.

Your employment or source of income...
Lenders usually favor those who have stable sources of income or employment. Lenders hesitate on those who shift jobs too much, or impose stricter rates to balance out the risk. A stable income is proof that you will be able to pay off your debt. The higher your income, the higher the loan you will qualify for.

Here is how lenders usually determine whether or not you are a low-risk borrower. They take a good look at your income, and determine just how much of it goes to your monthly payments and other loan payables. If your total debt is more than 40% of how much you earn monthly, then you are considered a potentially good borrower.

Your home equity...
Home equity, simply put, is the quantitative difference between your home’s assessed value and the balance that you need to pay from your mortgage. As your home equity increases, you are getting closer to being free of your mortgage loan. The lower the remaining balance you need to pay, the higher loan you can borrow for your home loan refinance. Note that lenders usually limit your loan amount to up to 80% of your outstanding balance.

Interested in seeing where you stand in terms of being able to prequalify for a mortgage?
Contact me and I can help....

Warm regards,
Kim Jones
Senior Mortgage Banker
678.468.4046 24 x 7 Cell
678.518.6917 eFax
3328 Peachtree Rd. Suite 200 Atlanta, GA. 30326
NMLS# 75615 | 545217
Web Reference:
0 votes Thank Flag Link Wed Jun 27, 2012
Also, contact a reputable lender or mortgage broker.
0 votes Thank Flag Link Tue Jun 26, 2012
I suggest you approach the owner with an offer to extend. Given 10 treasury bonds are in the 1.5 range, money markets under .5 chances are you represnet the highest safe alturnative investment.

0 votes Thank Flag Link Tue Jun 26, 2012
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