Breaking Down Lease-Option Florida Home Loans; What Do Lenders Look For?

If you’re consideirng lease-option financing - or have already agreed on terms for it - what should you know? Once you’re prepared to exercise the option and actually acquire a Florida home mortgage loan, what do lenders look for? Real estate expert Bob Bruss answers just such an inquiry.

DEAR BOB: When a hopeful buyer goes to a mortgage lender to get a Florida home loan to exercise a lease-option, does the bank look at the option consideration money and the rent credit earned during the tenancy as part of the down payment? I am told the loan-to-value ratio will be based on the option purchase price rather than the current fair market value.
- Joel D.

DEAR JOEL: Having been involved in many home lease-option purchases and sales, my experience has been that each Florida home loan lender treats lease-options differently.

When a lease-option buyer obtains an adjustable-rate Florida home loan, I’ve found the mortgage lenders are the most flexible, giving full down-payment credit for the buyer’s option money and the rent credit earned during the period of being a tenant.

The buyer should consult at least a half-dozen mortgage lenders to obtain their specific mortgage terms for exercising a lease-option. This is a situation where I highly recommend consulting an experienced mortgage broker who should know which lenders are the most flexible in such situations.

While it’s understandable this is a direction you may wish to head in - due to a lack of affordable Florida mortgage loans - be careful and always read the fine print.