Need a Good Mortgage Broker to Work with for Lease Options

[Tim Ivory]

I’m about to market for tenant buyers as part of a lease option strategy and need to be able to set them up with a good mortgage broker so we can see exactly how long it will take for them to qualify for a mortgage and buy the property they have leased through us with an option to buy. Ideally, I anticipate a third of them to eventually qualify and get a mortgage before their 3 year lease is up, though I have no first hand experience to corroborate this estimate. The payoff will be long term, so I’d need need a special kind of broker in it for the long haul and a forward thinker.

I will be continuously marketing for people who want to buy a house soon but don't qualify for a mortgage at the moment (as far as they know). As such, I need to know exactly when they will be able to qualify for a mortgage. Moreover, and perhaps most importantly, for a good mortgage broker to be willing to work with them to let them know what they need to do in order to qualify for a mortgage as soon as possible. My business plan is simple; I’m collecting a lease option fee from a tenant buyer after assigning to them the contract I have with the seller. I need to know they are on their way to qualifying for a mortgage before I refer them as a prospect to the seller.

I'll be contacting my local group of mortgage brokers soon, so the purpose of this thread is to reach out at the national level to any other mortgage brokers who would be interested in a lot of referrals, whether they are from a national chain or own their own business. Forgive my naivety if this doesn't sound like a good deal, but help me see why. I'd be very happy to find anyone willing to give it a try so I can get this project moving and focus on the hardest part -- talking with FSBO's!

Feel free to reach out anytime if you are a broker, or if you know of one who might be interested.

All the best of good things,

Tim

[Jay Hinrichs]

Originally posted by @Stephanie P.:

Originally posted by @Tim Ivory:

Interesting, doesn't seem anyone is interested so far. I can see how needing to wait a couple years before they qualify might slow things down, though. Hopefully, I'll have better luck at the local level. On the national side, I guess I have no other recourse but to reach out first and play the numbers game. Hopefully, at least one will be interested.

On that note, can anyone else recommend a good mortgage broker to work with for lease options? Any tips to accomplish what I'm trying to do would be greatly appreciated. This isn't a novel strategy, so I know other people are doing it, though, perhaps posting in the Lease Options thread might be a better fit. Thanks for your time.

With a lease option, the potential borrower is just leasing. There are numerous things that can happen over the course of 30 days (usually the time between when we take the application and close) and many more things can happen over the course of a year or two when the leasee wants to exercise the option to buy.  Looking for mortgage brokers at this early stage of the game is kind of fruitless.  

Have the leasee bring you a credit report and check for major infractions, judgements, bankruptcies and foreclosures.  If there are none of them, ask for 12 months of rent checks from their previous residence.  If you have all that, they should be credit qualified to lease.  After that, they have to qualify from an income standpoint, cash to close and the multitude of other things that they and the property have to qualify for before they can actually get funding.

this is a non starter for mortgage brokers  waste of their time..  they are busy they want to work on loans that will close. with all the dodd frank reporting that us Mortgage bankers have to do behind the scenes you don't realize how much work it is.. we have to do mortgage call reports quarterly and we have account for every application that came in and what we did with them.. so to work on ones that are just so far off and may never close.. don't see how anyone would do this. 

also keep in mind at least in my experience if they don't qualify now.. high probability they wont in the future especially as rates rise.. 

People do all sorts of weird things.. I have worked with NACA over the years a true no money down with lower than market rates and all you have to do is go through their program and follow the steps.. but even with that 70 to 80% of the folks simply cant get it together..

So for me lease to own is not an exit strategy its a rental lease strategy and if you get them to do some sweat equity or keep better care that's the up side..