skyline101, Real Estate Pro in Oakland, CA

I just got approved for an investment mortgage on a home I want to purchase.

Asked by skyline101, Oakland, CA Tue Feb 5, 2013

However, The lender has a condition:


Is this legal? I haven't even own the home and would i have a lease agreement?

Help the community by answering this question:


Some lenders will not condition for the lease and security deposit if none exist. They will instead condition for a Form 216 Operating Income Statement (appraisal report). Ask your current lender why they cannot use this instead. If their guidelines require the lease agreement and security deposit than feel free to contact me. Some of our lenders will accept the 216 appraisal report.

Linda Chu
Mortgage Center Corp
199 California Drive #200, Millbrae, CA 94030
Office: 650-652-9000 Fax: 650-652-9811
Direct: 415-531-3382
DRE #01905237 NMLS #851470
0 votes Thank Flag Link Thu Feb 7, 2013
I'm sorry, I meant Form 1007 – Single-Family Comparable Rent Schedule
Flag Thu Feb 7, 2013
The simple answer here might be to change your lender, if the seller will allow for the delay. All of our rentals are single family homes that we purchased as empty homes. I’ve had lenders ask me for lease agreements and proof of deposits for occupied rentals we were refinancing, but never on an empty single family home that was vacant and had previously not been a rental.
0 votes Thank Flag Link Wed Feb 6, 2013
If you are approved for a mortgage on an investment property, then what will be important to the lender is how much net income this property generates over the mortgage payment. If the property is vacant then the income is zero, and thus you have a serious negative cash flow. Lenders do not like that. Which means you ( the buyer) will have to show you can make the mortgage payment for the next X months before the lender will accept to fund this loan.
Talk with a real estate broker with investment experience to inform you about these issues before you buy the property.
0 votes Thank Flag Link Wed Feb 6, 2013
A lot of lenders require different items. If this property was used as a primary residence as you say then there will be neither lease agreement nor security deposit. I would explain to the lender that you would not be able to provide those items until you hold title and are able to find a renter to lease it out. Find out if they can make any exceptions or have some different ideas on how to make it work. My next suggestion is to contact some other lenders and find out what they require in this situation.

Best of Luck!
0 votes Thank Flag Link Wed Feb 6, 2013
If the property has been used as a rental, either Tenant Estoppels or Lease Agreements, and security deposit bank account statements are typically included in the disclosures. If for some reason they are not, your agent can write into the Residential Income Property Purchase Agreement that they are required.
0 votes Thank Flag Link Tue Feb 5, 2013
The problem is the seller did not use the home as a rental. It was his primary residence. It is a single family property.
0 votes Thank Flag Link Tue Feb 5, 2013
It is legal. Are you purchasing to live in the home? Is it single family or multi-family? There are too many unanswered issues here to clearly answer your question.
Congratulations on your approval. A competent buyers agent should be able to guide you from here.
Web Reference:
0 votes Thank Flag Link Tue Feb 5, 2013
Tenants have a rental agreement with current owner. Lender probably wants copy of that. They are looking for evidence that you can afford purchase. Seller can provide you with estoppel certificates that should take care of the rest of what is required. Don't you have an agent who can help tou with this? Or your loan broker can probably explain better than i. Good luck with the transaction
0 votes Thank Flag Link Tue Feb 5, 2013
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