I have an agreement with the owner of my home to take over full payments until I could get a mortgage for the home. At the time of the agreement I was still in college and didn’t qualify (tip income) financially. Per our agreement, I have built about 7,000 in equity over the last four years. Will a lender allow me to use that as down payment? If not, any suggestions.
I have all the paperwork for the agreement and bank statements to show house payments.
It depends on how the contract is worded.
In some cases this can actually be treated as a refinance instead of a purchase which will allow you to utilize the existing equity for qualifying purposes.
Can I use equity built in an owner finance situation towards a down payment for mortgage?
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normally no; they need that stupid thing called "skin in the game"
cash.
ALSO you did not volunteer what the home’s value is; if 15k,
yes. ITs yours!
References :
RE broker
It depends on how the contract is worded.
In some cases this can actually be treated as a refinance instead of a purchase which will allow you to utilize the existing equity for qualifying purposes.
References :
I’m a mortgage banker/broker
Some lenders will accept your "equity" if you can show proof of how that equity was determined.
Or you can just pay for an appraisal. If the appraisal shows the value at 5% more than you owe on your current mortgage, you can get a loan for 95% of the value. A conventional loan. The seller’s loan would be paid off and you would have the loan in your name only.
The only problem is if you wanted to pocket any money at closing. They won’t allow that..
References :