information needed Lease Option

General Real Estate Investing
1

Hello,

I need some information regarding a lease option. I have tenants in a home in a lease option for almost a year now and they have been the perfect tenants, always paid on time and kept up with the house like it was their.

They wanted to go through with the option on the agreed price of $140k but they can only get approved for $110k. Their option agreement would give them back $5,500. Their rent is currently $1200.

How can I help them purchase the home without sacrificing the sale price? Can I finance them the difference on a 15 years note payable in full in 5 years? is this legal? I still have a mortgage on the home.

In doing some calculation, their primary mortgage should be roughly $600, if I add T&I, it would bring it to $900. Based on their rent history, they have an extra $300 they could use the financing the reminder balance.

What document would I need to use ?

Any thoughts or suggestions?

Thank you

2

Will the 110K wipe out your mortgage? If so you might go for the note but I wouldn’t inform their lender. Don’t forget but they should get the tax credit to and you should have them give it to you. I’m a little iffy on this however, never done it. Herbster

3

thank you Herbster.

Yes the $110K would wipe out my mortgage. Can you explain a little bit more the note, how would that work…

Yes I remember the tax credit they would get and it would definitively help them pay off a secondary mortgage that I would give them.