Home Buying in Seattle>Question Details

Bob, Home Seller in Crawfordsville, IN

How does it work when the 1-3 yr. lease period is up & leasees are ready to buy ? Do they get convential loan?

Asked by Bob, Crawfordsville, IN Tue Apr 28, 2009

now & pay us off at that time ? Bob from Indiana

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5
Bob,

You don't state this directly, but it looks like you are (or are considering) a tenant with an option to buy the home you occupy.

If you are the tenant buyer, then chat with your mortgage broker. You are more than likely just going to buy the property as a normal purchase - so (most likely) yes.

In a typical lease-option scenario, you'll be reconciling the option fee, any pre-paid principal and any additional downpayment to get to a loan amount.

If you are looking to buy under a L/O scenario, then check your local laws and for goodness sake, use an agent or a lawyer to prepare the docs. Do ****NOT**** use lease option agreements from real estate investment educators without local legal review.

I hope that helps!

Dugald Allen
Web Reference: http://www.dugaldallen.com
0 votes Thank Flag Link Sat May 9, 2009
Hi Bob - Once the term is up the buyer which they would be at that point - they can get what ever loan they qualify for - whether that is FHA, VA, or conventional depends on their qualifications unless it was specified somehwere else that they can't. Let me know if you need a lender recommendation.
0 votes Thank Flag Link Tue May 5, 2009
Hi Bob,
I agree with Rob and Sam, it depends on the lease and what's worked out between the seller and potential buyer. It is definitely a good idea to have escrow help handle it, they are familiar with these types of transactions and yes, as Rob said, can ensure every detail is covered. From the lending standpoint, Sam is correct, VA, FHA, Conventional or USDA will work, depending on what the buyer qualifies for. On the lending side we treat it the same as a normal purchase, aside from any stipulations indicated within the agreement. I would recommend the buyer gets pre-approved though so you are certain s/he qualifies. Hope that helps, best of luck!
0 votes Thank Flag Link Wed Apr 29, 2009
There are no hard and fast rules about what has to happen next with the exception of what the two of you agreed to in the lease agreement. It is rare to see a lease agreement that stipulates the financing the buyer will need to qualify for at the end of the lease period and lets be honest who cares. So long as they are comfortable with it and you get paid according to the lease agreement.
I would recommend forwarding the lease agreement to a qualified escrow agent and let them handle the transaction from here. They are much better at these things and will make sure all the I's are dotted and T's crossed.
0 votes Thank Flag Link Tue Apr 28, 2009
This really depends on the type of lease you have. If it's a lease-option, the tenants can decide whether or not to buy at the end of lease period. If they decide to buy, they get a loan from their lender - FHA, VA, or conventional all work. If it's a lease-purchase, they're already getting the financing and are locked in to a purchase agreement from the start.
Web Reference: http://SeattleHome.com
0 votes Thank Flag Link Tue Apr 28, 2009
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