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If you have a real estate contract or a lease to own contract, how do you refinance that property?
Let’s distinguish the differences of a real estate contract or REC and a lease to own contract. On a REC, the borrower’s name goes on the title to the property along with the seller; that title is recorded with the county showing joint ownership during the term. In a REC, the seller is just like the mortgage company on a regular mortgage and the loan will also amortize like a mortgage. This is important because when the borrower wants to refinance out of the REC, it’s a true refinance and the loan to value is determined by the current loan balance and the property’s appraised value.
In a lease to own contract, the agreement is not recorded at the county and the borrower’s name is not on title. That means that when a person is ready to finance out of a lease to own, it’s really a purchase transaction, not a refi. The borrower can use a portion of past payments toward their down payment, as specified in the agreement. The only advantage of a lease to own agreement is that the price of the property was fixed at the contracted price. Lease to own contracts are seldom in favor of the buyer. A REC is always better for the consumer vs a lease to own agreement.
At Indigo Mortgage, we’re experienced in these alternate ways of purchasing property, and in coming out of those agreements into a traditional mortgage. Call us for your interest rate and mortgage offer.

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