Question on R20

My sister and her bonehead fiance are moving to Indianapolis next month. He has been working with our credit repair guy for the last 3-4 months to get himself in to a position to buy. He is not quite there so they decided to rent while he continues to work on his credit and then buy in 6-12 months, which I thought was a GREAT decision.

Then he met an investor down there that is promising him the world. He showed them a house they liked and told them the following: The house IS a bank owned property that his company completely rehabbed, that he he could get them approved for an FHA loan TODAY, that the house was worth $125,000 and he would give it to them for $105,000, that he could also consolidate all their existing debt into the loan so they could be debt free (except the house), oh and $0 down to move in.

Anybody ever heard of anything like this? I’ve obviously heard of sellers offering incentives for buying their house, etc., but debt consolidation and promising an FHA loan when you were just told you can’t YET qualify for an FHA loan??? There was also no mention of interest rate or any terms of the “loan”.

Can anybody help me understand this a bit better if it is legit?

Could be legit. Could be a predatory lender.

FHA first time buyer programs used to offer up to 97% financing and allow up to 6% seller contribution. So in effect, the buyer could get 103% with no money down. I think the buyer could also add closing costs on top of that. There was a time when a 550+ credit score would qualify for an FHA first time buyer home loan

I have no idea whether this can still be done in today’s lending climate.

Your sister needs to do some comparison shopping to see what is realistic in today’s lending climate. If your sister has good credit (720+) and can qualify to buy without putting the finance on the loan, then she will get much better loan terms. If she does not have the income to qualify on her own, then the fiance’s bruised credit will determine the loan program and loan terms the couple will be offered.

As for the property itself, it may be a bargain, or may not. It bears closer examination.

BTW, what is R20?

Thanks Dave. R20 (rent to own), or did you think I was referring to a Star Wars character? LOL

Her credit is shot. His credit is almost ready for conventional financing. I think my biggest thing with this is that we have spent a lot of time trying to get him ready to buy and now he is going to jump in this deal and…

  1. Spend a lot more on a house he is buying from this investor. He could get a much much better deal if he waits a few months and get his credit repaired.
  2. Piss me off because of my time he has wasted. Well, to be honest, I allowed him to waste my time knowing he is a goober with no follow through. Lesson learned.

I did not know since you typed R20, as in the next in sequence after R19.