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We're looking at a home with a close date that might be six months out. The current owners are awaiting the build of their new home. What mortgage options (e.g., rate lock, typical points paid for this lengthy of a lock) are likely most suitable given this situation? Thanks.

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Some people close earlier in a case like this, and then rent the house back to them for a set period of time.

I just did a rent-back agreement both as seller and buyer- basically you close the latest you can close (typically 60 days) and then take possession of the property 6 months after close. For each day that the seller stays past close, we arranged to pay (or be paid) principal + interest + taxes + assessments (if you are in a condo) to keep everyone whole. The good news is that rates are really low and likely only going up from here...

A few caveats-

1. You'll want the 6 months of payments in escrow so that they can't leave without paying you; add on top of this some cushion in case they are delayed
2. You'll want an extra security deposit in escrow in case they damage something, etc
3. You will still need to purchase homeowner's insurance from the day you close, so that could be factored into the payments if you are just renting now

I'd just keep an eye on the tnx . I think anything beyond 90 days would be costly.

How does a lease-back provision work if the buyer has an owner-occupied loan? Is the lender ok with it since the rental is back to the seller? Is there a time limit on the lease-back?

Or does this just become a completely separate transaction, and what the bank doesn't know won't hurt them?



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