Lease Option the only option here - am I thinking right?

[Jamie Gaymon]

Hello everyone! I could definitely use your help to make sure my thinking is on the right track with this one. Here are the numbers:

The house is a 3BR, 1.5 BA rancher. It is 1120 square feet. The owner has financing of:

1st mortgage - $142K or $1339 per month
2nd mortgage - 14K or $146 per month

Total monthly payment of $1485.

The comps in the area average 140-150K.

He is four months back on his mortgage, but has not been sent to foreclosure yet. He is definitely a motivated seller!!

The only way I can see this deal working is if I did a lease option at $1500/month, with at least a 7K deposit. It doesn't look like taking the deed is such a great idea in this case, with the seller need being above the comps, but what do you all think???

How should I structure this deal, if I should touch it at all?
This is my first deal, so any feedback or assistance would be most appreciated!!

:D
Jamie