Rent To Own
Avoiding Rent To Own Disaster
Rent To Own homes are a great financing alternative for those that cannot qualify for standard financing or need more time to save for a down payment. It can also be an answer for people that are not quite ready to buy for their own reasons but are confident that they will be ready before their Option Period expires.
When purchasing a Rent To Own home, two agreements are needed to complete the concept.
Separate The Lease From The Option To Purchase
To protect yourself, always require two separate agreements rather than one. Although it is not a common practice, some unscrupulous sellers have been known to find a reason in the lease agreement to cancel the whole transaction. If you have two separate agreements one will not affect the other. Separate agreements will discourage a landlord/seller from attempting to gain your option fee by taking advantage of a lease misunderstanding.
Avoid Major Modifications Until You Have Purchased The Home
Although this situation is mentioned earlier it bears repeating. The majority of standard lease agreements state that major modifications or those that are physically attached to the premises become the property of the lessor. Even if this is not the case it would be impossible to take basement-remodeling job with you when you move. Try to make do until you own the property.
Actively Monitor and Improve Your Credit
One of the most common problems arises when the buyer waits until the end of the lease period to verify that they can qualify for a home loan. Don’t let this happen to you. Before you begin looking for a home you should select a reputable credit repair firm that can advise you on the length of time it will take to improve your credit to the point that you will be able to purchase a home. You also may need to speak with a lender to determine their qualifications.
The time period you will need to improve you credit should coincide with the length of your lease. In other words if it will take two years to clean up your credit report make sure that you have at least a two year lease.
Choose A Lease Payment That Is Affordable
Buying the home of your dreams can be a wonderful experience. Just make sure you aren’t dreaming about your ability to afford the home. A lender is not going to dictate the amount of your payment in this situation. You have to determine the answer. Take some time to design a comfortable budget before you begin looking and stick to it. Unaffordable lease payments can mean late payments and late payments defeat the whole process of credit repair.
In addition to the common problems associated with Rent To Own agreements you also want to avoid those that are not so common. Professional help can often save you time and money when dealing real estate. Many people avoid hiring a realtor or an attorney during this process thinking that they will save money. The next section deals with hiring the right professional the right way.
Don’t Go It Alone
Purchasing a home may be the largest investment that you ever make. A home purchase involving financing can involve a number of specialized professionals including:
• A RealtorPurchasing a home on a rent to own or lease purchase basis can be even more complicated than a standard purchase.
• An Attorney
• A Title Company
• A Lender
• An Appraiser
• A Home Inspector
Access To Other Professionals
Realtors that deal with Rent To Own homes on a regular basis have built relationships with lenders, appraisers, title companies, real estate attorneys, and other professionals that you will need to utilize in your home purchase process. This is a much better process than thumbing through your phone book and hoping that you pick someone that will treat you fairly.
To Rent To Own – Or Just Own Now?
If your reason for looking at Rent To Own homes is a credit issue have your realtor give you an opinion as to whether your particular credit situation would bar you from purchasing a home. Chances are that they know a lender that will review your credit for no charge and let them know. You may be surprised to learn that there are several loan programs available that are not qualified by credit scoring. You may be able to buy now if you wish. Find out BEFORE you Rent To Own.
Have Your Agreement Reviewed
If you do decide to use the Rent To Own concept to purchase your home have an attorney review your Rent To Own & Lease agreements.
Don’t just sign the landlord/seller’s agreement and hope for the best.
It’s not always what is in the contract that makes the difference. Sometimes it is what isn’t in it.