Typically the tenant can't qualify for a purchase loan today because of
credit issues or they don't have a sufficient down payment. We have a
unique loan program for your tenant which doesn't require a down-payment
or strong credit scores. The tenant can obtain a loan on the property
after a one-year tenancy using the equity in the property as the down
payment. During that first year of tenancy, the tenant can work on
improving their credit scores to an acceptable level. In lieu of a down
payment, the loan is based on the appraised value NOT the purchase
price.

Here's an example:

• You have a property worth $100,000 today. You negotiate a
  lease-purchase tenancy agreement with your tenant for a twelve month
  term. At the end of that term your tenant will purchase this home for
  $100,000. During the term the tenant pays you rent each month (on time
  and keeps cancelled checks to prove an on-time payment history!). Also
  during this term the tenant is working on fixing/improving his credit.
   
• At the end of the term your tenant is ready to purchase the property and
  they obtain a current appraisal to determine the current market value of
  the property. Let's assume the current appraisal is for $107,000 and
  tenant's credit scores have improved to at least 600 and he meets the
  qualification guidelines for a 100% loan.
   
• This loan program will allow the equity in the property - the difference
  between the purchase price and the appraised value, $7,000 in this
  example, to be used for closing costs and prepaid taxes, insurance, and
  interest. The tenant can obtain a loan for $107,000 (the CURRENT
  appraised value), pay you $100,000 and use the remaining $7,000 to cover
  closing costs, prepaids, etc. The tenant can purchase your home without
  any money required for a down payment or closing costs.

It is important that tenant keep copies of his cancelled rent checks
during the twelve month rental term. Verification of an on-time payment
history is mandatory!

This lease-purchase loan program offers flexible underwriting
guidelines. As the example indicates, the tenant can get up to 100%
financing with a 600 credit score and up to 95% with a 580 credit score
with income verification. It also allows for stated income, no ratio
and no doc loans.

We recommend that your tenant complete a loan application at the time
they sign the lease-purchase agreement. This will allow us to determine
what type of loan they can obtain in twelve months and give us an idea
of their credit scores. The tenant can review their credit issues and
develop a plan to improve them. There are so many options with this
loan that we recommend that you call with your scenario.
 

Peter Berk - Sean Trombetti - Mark Widerberg
Georgia Residential Mortgage Licensee Rates and Terms subject to change without notice.