Owner financing can help sell a property in this challenging market.
Banks generally are willing to accept rent credits for an option to buy as an acceptable down payment, but both buyers and sellers must follow these guidelines for Fannie Mae and Freddie Mac to sanction the transaction.
The rental amount must be determined by a property appraisal with the credit for the down payment clearly calculated as the difference between market rent and actual rent paid for 12 months. For instance, if market rent is $1,000 and rent paid is $1,200, $200 could be credited monthly toward the down payment.
The rent/purchase agreement must be for a minimum of 12 months. The contract must clearly specify a rental amount as well as the portion to be credited toward the purchase.
The buyer will need copies of canceled checks or money order receipts for 12 months, proving rental payments to persuade the bank to credit the funds toward the down payment.
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