37 years ago David Ruch started his loan career and throughout the years he has learned to think creatively and now holds a reputation a great financial problem solver. Now he is training his team to do the same.
He noticed a need in the mortgage industry 17 years ago to have an option for every person. Typically, those who can afford a payment but have poor credit or are self employed are completely cut off from financing opportunities.
This is why he built the owner finance/ lease option program.
Think of this program like a tool in your toolbox. It has the ability to...
Help conventionally underserved individuals achieve their home ownership goals.
Bring in 30% more leads when used in advertisement.
Enables you as a realtor to sell more homes more quickly.
Who would the lease option be good for?
There are many instances where people do not qualify for a loan even though they can afford a lease option payment. This may include:
Poor or Damaged Credit
Self Employed
Short work experience in a new field
Short rent payment records
Many people think an owner finance/ lease option is akin to predatory lending but if you put your feet in the shoes of others you can see how helpful it can be. There are a lot of people that would rather pay a higher lease payment with the contract to buy while they repair their damaged credit or show their income on tax returns than rent. Here are some bonuses to the program.
They don't have to move twice.
They can treat the home like it is their own.
They won't be kicked out.
Rent won't be raised.
They can break the contract and get their downpayment back at anytime. (unlike lease purchase agreements)
They can lock in a purchase price upfront, which in a fast inflating market could create powerful savings.
We will work with people over the 3 year lease option term.
We help repair their credit with our awesome credit repair program.
Know exactly how to become mortgage ready with us from the start.
At the end, we will provide their loan.
How does the program work?
If you find someone who qualifies for the lease option program, we will buy the home for them and lease option the home back to them. Then we help them become mortgage qualified and do the loan for them when they are ready.
We put an owner finance/ lease option contract in place and we become the buyer.
We can even remodel properties for clients before they more in!
The three components:
Downpayment is 10% under the FHA loan limit and 20% above the FHA loan limit minus $5000. In most cases no additional downpayment will be required at closing of the loan.
Monthly payment - This will be higher than the PITI payment because we put the remainder of the 25% downpayment down to secure our loan and must show a percentage above the PITI to qualify for our loan on the property.
The client has three years to exercise their option to purchase. If they buy in year 1 we add 5% onto the purchase price. If they buy in year 2 we add an additional 5% to the purchase price. In year 3 we add nothing to the purchase price.
Requirements:
Must have sufficient job stability.
Must have sufficient income to afford the lease payments.
Get more leads with owner finance/ lease option program.
This program has some powerful effects.
Buyers disqualify themselves. They don't think they can qualify so they don't call a realtor or a loan officer. They don't do anything but they think they can qualify for owner financing. This product gets them in the door.
This lease option/ owner finance program enables you to advertise any listing on terms which on average increases your leads by 30%.
Heres what to do...
1. Place the terms "Available with owner finance/ lease options. For more info call (805) 235-8575" in the front of your listing so that it shows in the description.
2. Place this add on Facebook and craigslist. This will make it appear more like a listing from a for sale by owner.
That's it! If you put our number in the listing and we will take the calls of those that are interested in owner finance/ lease option and return qualified people back to you.
This is not deceptive advertising. This lease option is a viable product. This is not switch and bait because in most instances we are able to give them a better financing situation than they expect. 80% of leads generated by the lease option/ owner finance terms actually qualify for conventional financing.
You can sell to us consistently. We are experienced in the whole purchasing process and will handle our own financing needs which means we are easy to sell to.
How does this effect the seller?
We act as the buyer in this arrangement. We will negotiate the sale and you will sell the home to Nationwide Home Loans for every owner finance/ lease option deal. So it is just like a normal transaction.
Lets’ help more our clients together
We have seen this program help a lot of people over the 17 years of its operation.
Here are a few current examples of how we have helped our clients and realtors.
In Colorado there was a contractor who had been in forbearance and didn’t have the rental history required. We purchased their family a house and then they are getting the required rental history to qualify in 12 months from now.
From one listing advertising owner finance/ lease option terms we were able to generate 8 closed deals for the listing agent.
Author: Logan Wais MLO at Nationwide Home Loans inc. Written July 23 2021.