After the issue that is keeping you from getting a loan is fixed and you try to refinance in order to pay off the seller, the mortgage underwriter MUST follow the guidelines you tried to circumvent, how do you think that works out? Hereâ€™s a hint, they will follow the guidelines, not the contract between you and the seller. That is only one of the reasons this method doesnâ€™t usually work out. The other big issue is buyer optimism and timelines. The loan officer that turned down the loan application answered the buyerâ€™s question regarding how long before I am eligible, giving the best case scenario. The buyer uses that as the time line for the rental period â€“ poof - it takes a lot longer.
Use a worst case scenario not the best case and that improves the odds slightly as long as the contract is worded to meet the requirements of the mortgage guidelines.
I hope my insight keeps you from losing hard earned money, good luck,
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
I hope this info has been helpful & feel free to contact me with any questions you may have.