Owner Finance to Bank Refinance

[Ryan R.]

How do banks recognize owner finance?

Here is what I want to do.

Owner Finance with zero down.
Rehab the property and put tenants in place. 2-3 months
Refi the property through a conventional 30 year loan.

Will a bank recognize owner finance and treat the property as if it is mine? The goal would be to refi without the 20% down since my LTV would be less than 80%.

[Kenneth E.]

Ryan Richard, I asked this to a friend recently and he said there are several ways of making this happen. I am not an expert and have no experience...just sharing what answers I got.

The seller could record a lien (mortgage) on the property at the local courthouse. Or, you could sign a land contract and also file it down at the courthouse. Either way, its filed at the court house.

The key issue, as I was told, is finding a bank ahead of time (ie NOW) and asking them how they would prefer you structure the seller finance deal before they do the refi. One of the seven habits = begin with the end in mind. That is, in this case, you should start at the end (the bank) and work your way backwards (on how to structure the deal with the seller).

Might not be much help, but the advice is to talk to the banks before anyone else so you can pave the way to a smooth refi.