Carol Munroe, Both Buyer and Seller in Corpus Christi, TX

My tenants want to buy but probably can't qualify for a mortgage at the price. I need to sell so I can buy

Asked by Carol Munroe, Corpus Christi, TX Fri Jan 4, 2008

elsewhere. Advice?

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3
Try to get them qualified first. You're just spinning your wheels until you know this and know the details. Once you know what they can qualify for, then you can go to various options. Maybe you can take a second mortgage for them. Maybe you can gift them the difference. You just don't know until they get qualified and find out for how much. If they don't qualify at all, then if the rent is right you might can flip to another investor. If the rent is not right (too low), then you'll need to sell to someone who can qualify.
Web Reference: http://www.teamlynn.com
2 votes Thank Flag Link Fri Jan 4, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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Carol,

Both Bruce and Jim gave you great answers. The "buy-down" approach Jim was mentioning is actually a great way to help your buyers get qualified if it's a question of affordability. I've seen the "3-2-1" buy down program work great for that kind of situation.

Also, like Bruce spoke about "taking a second" may be a one-two combo that may just make it work.

As I agree with Jim, there's a lot of pluses her to make this work w/ your tenant and alot of costs that it may help you avoid; so working with them as much as possible is a good idea.
Web Reference: http://www.exposedhomes.com
1 vote Thank Flag Link Fri Jan 4, 2008
This could be a win- win situation. Your tenant saves on moving costs, you save on marketing expense and vacancy lost rent. You and your tenant will want to independently arrive at a fair market value and negotiate a deal that is fair to both of you. - Because of your own savings, and the peace of mind in not having an unsold vacant house on the market, you may want to consider closing costs assistance and or an interest rate buy down that would help them qualify. - Bruce's suggestion of a seller carry back 2nd mortgage may alternatively be the way to go.

an example of the way a seller paid interest rate buy down works: Seller pays buyers lender at close of escrow an amount equal to 4.25% of the loan amount. - In return the lender lowers the interest rate for the buyer by 1% for the first five years of the mortgage. - Take note that this strategy saves the buyer more in interest costs over the five year period than it cost the seller upfront.
1 vote Thank Flag Link Fri Jan 4, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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