I have a deal that I am working on right now that goes as follows:
Recently appraised SFH at $190k
Purchase price at $160k (subject to existing financing)
Payments are $1500/mo PITI on approx. 160k, on a 2yr ARM that expires in December then payments go to $2000/mo.
I am thinking possibly of refinancing the sub2 loan and getting the payments down as far as possible for cash flow. Then the owners would like to stay and I might lease/purchase the property back to them.(Their income and credit is decent, just got in over their heads with the ARM).
Any issues with refinancing this, ie. seasoning, etc. that I may want to look out for? I still haven’t decided if the original owners will be staying or not, but the refi would definitely give me more options such as better cash flow, possible owner financing from me, etc. Any thoughts?
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Rob,
Explain your situation a bit more, I am confused. Your 2 year ARM is about to expire in Decmeber and you are looking for options on what to do? Where are you located? How is the market? How is your credit? Are you planning on selling soon or to the people leasing?
I don’t have the deal signed up yet. I am meeting with the seller tomorrow and I am trying to better work out my exit strategy before going in. If I sign the deal up it would be subject to the existing financing. I don’t plan on keeping the existing financing for very long as the ARM on the existing loan goes up in December. My credit is around 680 mid score. I am using the subject to as a quicker way to get into the property without the loan costs. It’s much easier to refi later if necessary. Hope this helps.
Sorry, forgot to add a couple more details. I am in Southeastern Ohio and the market is starting to turn from neutral to a buyer’s market. Many homes are still selling under 90 days and the demand for l/o or owner financing is huge. My plan is to l/o to a seller on a 12-18 month option with one renewal term.
Sellers may be heading down the road to divorce but haven’t filed yet. They are fine with the subject to, but that could change or become messy if they actual file for divorce, so I want to be ready either for a DOS issue or payments rising due to the ARM.