My question is:
When someone does a lease purchase option, how does the rental credit, down pmt, etc. work towards the loan?
Example: $200k purchase price…$1000 deposit, $1675 pmt - $300 rent credit. 24 month note
$8200 option credit total.
Does this price apply towards closing costs for the T/B or off the price of the home?
Also, does the T/B do an actual “purchase” or I’ve heard they can do a “refinance” instead and this saves money for everyone.
Any advice would be greatly appreciated!!
The contract determines what happens at the end of a lease/option. That is all negotiable within your state’s laws. Many folks don’t like lease/options because of the many crooks out there pushing them. Lease options are fine when they are constructed in a win-win manner. For folks with bad credit, paying their lease payments shows a lender they are able to pay their bills, which makes it easier to get a loan after they raise their credit score. I have a copy of Jeff Beaubien’s Lease Option book with contracts I will sell at a good price if you are wanting one of the best lease option basics publications available. The forms are some of the best out there. Shoot me an email if interested. I have read most of the other L/O courses and books out there and can give an opinion on them.
Does this price apply towards closing costs for the T/B or off the price of the home
This would be up to you. It usually comes off of the original agreed upon purchase price? Closing costs are a seperate situation.
Also, does the T/B do an actual "purchase" or I've heard they can do a "refinance" instead and this saves money for everyone.
This depends on the buyer’s situation.
If they do a purchase of the property they will need to obtain 100% financing and or put money down. They would also need to bring the closing costs.
If the LTV of the deal allows it they can do a refinance (and maybe even get cash out) If the scenario is done right they could roll the closing costs into the loan and pay nothing “out of pocket” This is known as a land contract refinance