Greetings,
I am in the Cleveland Ohio market that has been hard hit with foreclosures and some very long market time!
I had a client's home listed for sale for well over one year with approximately 1 showing every 2 months! They very much wanted to buy a home in another area so they proceeded to search for a renter for their current home. They got lucky and found a renter within a few days. I checked with the buyer's loan officer who told me they were pre-approved and ready to go.
They purchased the home and within one day of the agreement being accepted, the loan officer started telling me that the loan could not be conventional (as was initially "promised",) but rather it had to be fha. If they wanted a conventional loan, the buyer had to have 30% equity in his present home in order for the lease to be considered in the loan approval, which they did not have. I had never heard of this so I suggested he check with another lender, (someone I trusted a lot) and she said she had not heard of that requirement. She also checked with her underwriter who also said she had not heard of that as a requirement.
The buyers went forward with a conventional loan with the lender I recommended and we closed in 3 weeks, which was late September 2008.
A few weeks ago, I saw that loan officer at a broker's open house and she told me that 1 week after the above loan was closed, they were given a directive that anyone using a lease on their current home to qualify for a loan to pruchase another home must have at least 30% equity in that home.
So use caution if a prospective buyer tells you that he is ready to buy because he has a renter for his present house!
Regards,
Barb
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