Tips to Offset Sellers Debt in AFS

[Luke_Frerichs]

Hi, All



In the case of a seller entering into a
Agreement For Sale. Which banks have you found are more lenient to
accepting the buyers payments in a AFS as income to offset the
sellers debt load so he can go out and qualify to buy a new house?



Any good tips on how to make this work with the lenders better would be welcome to.



Only things i can think of is full disclosure to start. Tell the bank you are entering into a AFS and need a mortgage statement early on. This lets them know something is up lets you verify some important details.



Have a sit down with the seller,bank and your mortgage broker to better explain how things work..



Is there something else I'm missing... I really want to get this right...



Cheers

 

[AndreaW]

I have found that most banks will deem an AFS to be similar to a rental property and thus the rental income offset will be added to the Seller's income to help lower the debt service ratio so that they can qualify for another mortgage.



The Seller should have good credit and if the down payment for their next home is coming from money that you are providing them or they are using money from a HELOC, the more they have down, the easier it is for them to qualify. I generally have the Seller go see my mortgage broker BEFORE signing the AFS. I don't want to put them in a situation where they will not be able to qualify and then be unhappy with me.



Full disclosure is always best!