- Joined
- Jun 22, 2008
- Messages
- 191
Hi,I got an inquiry about RTO from an interested tenant-buyer in Ottawa.
Background about the applicant
The applicant (she) works in the Fed Government since 1989. Her husband had major surgery last year and was off work with barely any income. She was alone to pay 2 mortgages, heat, hydro, water, insurances, food and all unsecured bills. When they sold the house, it only paid the 2 mortgages and the agent and legal fees. It was not enough for the unsecured that is why her credit is not very good at the moment. Her husband has returned to work full time to the same company that he has been with for the past 5 years driving school children. Her husband had co signed a car loan for her son and he had the truck repossed and he is making arrangements for the balance but this reflects on my husbands credit.
Her request
She wanted to buy a 3-bedroom condo (~$180,000) for a 3-year term in East Ottawa. She`s ready to move in March 2010. She can afford approx $1,700/mo.
Questions I have.....
1. Is she a good candidate? What additional due diligence should I make?
2. I will request an application fee. Is $500 normal?
3. She will shop the house on her own and let me know what she`s interested. I will come and see the house with her only if the number makes sense, so I am not wasting my time. Is this the right RTO model?
4. If the house doesn`t make sense and I disapprove (after several times), do I reject her and return $500 fee? (ie we`re not a good match)
5. She said she can put down $2500 down payment (on top of $500 application fee). Is this sufficient?
6. My proposed rent for a $180,000 condo is $1300 per month. I suggest a monthly credit of $500. Her total payment will be $1,800/mo
7. After 36 months, she will have a credit on file of $500*36 ($18,000) + 3,000 deposit = $21,000 to be applied to her purchase.
8. I plan to use 6-6-6 appreciation model. $180,000 will become 214,382 in 3 years. Her credit will be 10% of purchase price.
Any comments are welcome!
L Lee
Background about the applicant
The applicant (she) works in the Fed Government since 1989. Her husband had major surgery last year and was off work with barely any income. She was alone to pay 2 mortgages, heat, hydro, water, insurances, food and all unsecured bills. When they sold the house, it only paid the 2 mortgages and the agent and legal fees. It was not enough for the unsecured that is why her credit is not very good at the moment. Her husband has returned to work full time to the same company that he has been with for the past 5 years driving school children. Her husband had co signed a car loan for her son and he had the truck repossed and he is making arrangements for the balance but this reflects on my husbands credit.
Her request
She wanted to buy a 3-bedroom condo (~$180,000) for a 3-year term in East Ottawa. She`s ready to move in March 2010. She can afford approx $1,700/mo.
Questions I have.....
1. Is she a good candidate? What additional due diligence should I make?
2. I will request an application fee. Is $500 normal?
3. She will shop the house on her own and let me know what she`s interested. I will come and see the house with her only if the number makes sense, so I am not wasting my time. Is this the right RTO model?
4. If the house doesn`t make sense and I disapprove (after several times), do I reject her and return $500 fee? (ie we`re not a good match)
5. She said she can put down $2500 down payment (on top of $500 application fee). Is this sufficient?
6. My proposed rent for a $180,000 condo is $1300 per month. I suggest a monthly credit of $500. Her total payment will be $1,800/mo
7. After 36 months, she will have a credit on file of $500*36 ($18,000) + 3,000 deposit = $21,000 to be applied to her purchase.
8. I plan to use 6-6-6 appreciation model. $180,000 will become 214,382 in 3 years. Her credit will be 10% of purchase price.
Any comments are welcome!
L Lee