Unless this home is headed to foreclosure anyway (without being currently delinquent), I cannot imagine the upside to the seller would out-weigh the risks involved.
Mark Atteberry, SG Priest Realtors
Personal Service, Expert Results
Confer with your mortgage broker
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Contract for deeds have their own risk if the seller has an existing loan on the property. Most mortgages have a due on sale clause (paragraph 17 or 18?) that allows the lender to call the loan due if the title is messed with. That would be if the contract for deed is recorded. If the contract for deed is not recorded the buyer is more at risk, if it is recorded the underlying mortgage might be called due and payable, hurting both buyer and seller. Lease options may be a route, but both lease options and contracts for deed rely on the seller making payments on the underlying loan if there is one. Both of these methods would have much less risk if the seller owns the property free and clear.
Underwriting guidelines are actually fairly liberal, OUCH, did he really say that? Yup, and they havenâ€™t really changed all that much since the 1950â€™s, credit reports were even graded back then. The truly safe route for a buyer is to take an honest look at the issue that is holding them back and address it head on. ANY attempt to circumvent the problem adds to the borrowerâ€™s risk. Acquiring debt is not a prize; it is a tool to help reach the prize. The best question is: how soon do you want to be debt free? Let me know if I can help you develop a plan with less risk.
It's possible to play with snakes and not get bit, but I always recommend not to play with snakes.
Co-signing by a non-occupant buyer doesn't necessarily qualify a buyer who can't qualify on their own. The occupant buyer has to have sufficient income, credit and reserves to qualify for a mortgage. When someone co-signs on a loan, they are co-buyers and would be on the title along with you.
If they own the home outright, or have substantial equity, they possibly could provide owner financing.
The other option would be to set up a lease purchase option, where the buyer rents the home, having purchased the option to buy the home at a later date for a predetermined price. This would allow you time to improve your credit and give the seller some income and a potential sale.
Realtor, GRI, CSSN
John Hall & Associates
Basically, anyone can co-sign. And that would be a nice selling point for the seller. The downside, of course, is that if the buyer defaults, the lender can come after the previous owner. In addition, co-signing probably will have a negative impact on the seller's credit score, as does any additional debt or liability for debt.
Hope that helps.