In a previous article, we discussed options to get a mortgage for buyers who had recently completed a short sale; those options don’t apply to all such buyers, but a savvy agent can still help those other buyers purchase a home via a lease-purchase contract.
That other article spells out the requirements that a previous short sale must meet in order for a buyer to be able to qualify for a new mortgage. If a prospective buyer’s previous short sale doesn’t meet those requirements, then they are usually precluded from getting a new mortgage for 4 years, or in some cases (if truly extenuating circumstances can be shown to have caused the short sale) 2 years.
Prospective buyers in this scenario do have a very good option for buying a home, however–a lease-purchase contract. A lease-purchase contract is one that says, basically, that the buyer will actually rent the property for the first X years (usually somewhere in the 2-6 year range); at the end of that lease period, they then officially purchase the property (at the price originally negotiated), with some or all of their lease payments getting credited towards their down payment by the seller.
The advantage of a lease purchase to the buyer who has a recent short sale on their credit history is that it lets them move into the property that they want now (and lock in their ability to get that particular property at a specific price), while deferring having to get a mortgage until enough time has passed that the short sale should no longer adversely affect their ability to get a mortgage. The seller also wins, as they get a steady cash flow for the lease period, which often will enable them to meet the goals that were prompting them to sell the property. (Sellers who truly need a lump-sum payment of the equity in their house immediately, then a lease-purchase contract might not be appropriate for them, but many sellers aren’t in that situation and welcome a lease-purchase once the details of it are explained to them.)
Interested in exploring a lease-purchase purchase? Contact us and we would be glad to have one of our buyer agents help you understand how a lease-purchase works.
Possibly related posts (automatically generated):
- How Long Do You Have To Wait After A Short Sale Before You Can Get A New Mortgage?
- FHA announces new guidelines for post-short-sale mortgages
- Short Sale & Foreclosure Resources for Buyer Agents
- Financing For Buyers Of Recently Purchased Properties (aka Flipped Homes)
- CRESPA Update confirms Virginia buyers’ rights to choose Settlement Agent
- The difference between Down Payment and Deposit
- Inquire About Your Eligibility For A Loan After A Short Sale
- Bridge Loans Help Borrowers With Short Term Funding Needs
- Using Seller-Assisted Financing To Sell Your Listings Faster & For A Higher Price
- New Property Disclosure Form in Virginia
