Is a rent to own deal doable with an existing mortgage mortgage?

[Claire Nichols]

Is it possible in the state of Florida to execute a rent with option to buy contract if there is already an existing mortgage on the property? Also is the something most conventional lenders would allow?

[Chris Seveney]

@Claire Nichols

1. You first have to read what your existing mortgage says

2. Most states allow it but the rent to own option must be greater than the amount you own

3. You should consult with your attorney about it as well as an underwriter and MLO since it appears a portion of the payments are going to provide the buyer an equity interest and therefore make sure you meet FDCPA, CFPB, RESPA and consumer finance laws.

These are very High risk for both parties- for example if they trash the place and walk away, you basically will have very little recourse and could be stuck with a home that needs a lot of repairs and is underwater

For them if you were to ever stop paying the mortgage the property could be foreclosed upon and they lose everything they paid.

This is why I would not recommend this type of arrangement