We finally sold our home…well, sort of. (This picture is of our ‘home purchasers’ and myself, my wife couldn’t attend the key hand off).

About 3 Months ago, we wrote a post about our home and how we couldn’t afford to own it anymore. We had the choice of finding some way to sell it or have our mortgage company foreclose on us. My wife and I didn’t want to go down without a fight, so we took the drastic measure of moving in with my ‘rents (that’s the cool term for parents), staying in their basement and out of our home that we loved so much.

We had to call our mortgagor and tell them that we were unable to make our mortgage payments and we needed some help. The gave us a 3 month break from payments so we had some time to try to solve our problem (come up with our unpaid mortgage amount or sell our home…or else). During that time, Shawna and I have been racking our brains to try and figure out a solution that would not only get us out of this mess, but hopefully put some money into our pocket as well (we did put tons of hours into our home, fixing it up from when we originally purchased it 3.5 years ago).

What we did (with the help of God) was have a lawyer draw up a ‘Lease to Own Contract’ (that we are giving to you for free at the bottom of the page) and found a married couple that was interested in having their monthly rent payments go towards the purchase of a home. Along the way I believe we found a short term market niche for real estate investments.

The Details (let’s call the person paying us the TENANT):

• the TENANT will pay a monthly payment to us, (which will include $ that will go towards the principal for them to purchase the house from us, the interest for us taking the risk and acting as their bank, homeowners insurance in case the house catches on fire and the property tax)
• When we receive that monthly payment, we will then pay the bank that we have our mortgage through, which will cover our principal, interest, homeowners insurance and property tax
• The official home ownership (the paperwork that says Shawna and I own the home) won’t change until the TENANT decides to pay us outright for the home or goes through the 20 years of payments as we’ve set up.
• Why would the TENANT want to do something like this? Well, first off there is no need for them to get a mortgage from a bank (which is nice if you currently don’t fit the criteria to get a mortgage). They don’t have to do anything different from paying rent like they normally would (it’s easy). It is their home unless they decide to move or not make their monthly payments (all the money that they’ve payed every month does not go back to them if they decide to terminate our contract).
• Why is this good for us? We make positive cash flow every month $60 a month extra we can apply towards our home principal. We can pay our bills. If the TENANT carries the payments to the full 20 years without paying the home off in advance, we will make $40,000 extra in interest (that’s a nice little investment). We don’t have to do any of the landlord responsibilities because it is their home and they are responsible for everything that breaks down, etc.
• We also had them pay a $3,000 (non refundable) down payment to start this process. This payment goes directly towards the principal of their home and we get enough up front money to pay off our past mortgage payments (the bank won’t foreclose)!

How is this a market niche? When our nation is going through home sale hardships (because it’s hard to get a mortgage), why not purchase 10-20 forclosed homes and duplicate this process? be a landlord without the responsibilities of fixing up and maintaining the property. And if you really wanted to protect yourself, you could create something about a pre-payment penalty in the contract. It could say, if the TENANT pays off the total home value before 50% of the contract term has been complete, there is a penalty of “BLANK” %. Something like that.

We just wanted to let you in on how we got ourselves out of a sticky situation. If you would like to download this contract in an editable (Microsoft Word) format, Please Click Here. Also, if you would like to use an Amortization Chart (like what we used to help create this contract) Please Click Here.

Please note, this document was designed and created specifically for our situation, so not everything will apply to you. We still recommend having a property lawyer look at this contract after you have edited it. It will still be considerably less expensive having them proof it than creating a new contract.

If you can benefit from our experiences, please take advantage of them.
We are thanking God and Enjoying the day! Have an Awesome day yourself.
~Chais & Shawna Meyer

PS. If you don’t have Microsoft Office which is needed to edit these document types, go to Open Office’s website and download their Open Source program for your computer. It’s free and does the same things Microsoft does.