Lease Purchase Option Question

[cassie701]

Can anyone explain to me how this situation would work?

A person (renter) signs a lease purchase option agreement for a 1 or 2 yr term. Before the 1 or 2 yr term expires, the person (renter) decides they want to refinance or sell and have their name added to the title. The person(renter) now becomes a borrower and wants to refinance or sell. Can this be done?

If so, please explain the steps that need/should be taken.

Thank you in advance!!!

[liverichly]

Each sub-prime lender has different guidelines pertaining to lease/purchase refinancing so there aren't specific steps to qualify for everyones program. In my opinion First Franklin is the easiest. They allow the seller & buyer to set the "pay off" amount (no "rent schedule" needed by the appraiser to determine the "market rent") and will use new appraised value after the 12 month mark, limits the LTV to 80% though. Alt-A & conforming lenders also do lease/purchases, but they are treated as a purchase instead of a refinance.

[mbva]

Actually the renter at the end of the term can seek financing for the project as a refinance. All they need is the last 12 months cancelled checks and the loan officer working it for them can put it through that way. This also allows for a lower required beacon score.

[Greg]

It is lender specific. Most lenders in sub-prime treat a lease option as a lease.

In most cases they need to be deeded 6-12 months or longer.

Are you possibly using a lender that considers the lease option a purchase and trying to see if deeding the borrower will qualify it as a refinance?

The answer in most cases is no.

I suggest Aegis Funding on this. They should consider it as a refi and use appraised value. They even do "Unrecorded Land Contracts" using appraised value.

FF is a good one too for LC/LO.

[equibanc]

They're pretty simple. Some lenders treat it as a purchase (there are closing costs associated, but you can use SPCCs to cover). Others treat it as a refi and you can roll in closing costs. It's basically a wash either way, except one way removes recission.

For me, I need 12m cancelled checks. I'll use the appraised value to drive LTV. No cash-out, however. Let me know if I can help.

[macp]

Aegis Funding will do this type of loan. You need a lease purchase option agreement for 1 year. You dont need cancelled checks either just a contract dated properly. Basically theyll treat it as a refi and dont have to finance it 100% if there is equity.