I paid 105K interest is 6.25 fixed and have a HELOC of 23K, right now 5.0 interest. This is a rental that can bring in 1500 monthly. Total PITI + equity line is $1300, can be rented for $1500.
I have buyer interested in a wrap-around for 200K interst 8.0 based on a 30 year term, and then a balloon in 2-3 years. But he only has 5% down, and is in foreclosure now on his present home!
Possibility of him defaulting in the future? Is 5% worth the headache of foreclosing, even with the spread involved?
He says his current payments are $2400 and going higher, interest is 10% and rising. He has three weeks to vacate his property. He can only afford payments of $1800. He is just letting his house go (bad idea).
What kind of qualifications do I ask for besides job history? I already know his credit is shot.
With a credit challenged buyer, you can still move forward. Just take precautions to mitigate your risk. Offer a lease option for two years. Let your “buyer” move in as your tenant at $1500 monthly. Set the option purchase price at $205K. Do not offer any rent credits. Collect whatever option consideration the “buyer” is willing to pay, but not less than 2%.
It normally takes about three years after a foreclosure to get decent interest rates on a mortgage. So, if he can’t get his credit together in the next two years, you can agree to extend the lease and option for another two years.