Financing in San Antonio>Question Details

sonya, Home Buyer in San Antonio, TX

I need information on rent to own properties in San Antoio and the programs that offer this option.

Asked by sonya, San Antonio, TX Tue May 14, 2013

Please advise the details of these programs. Is a down payment required, and how much if so? How does it work? Are there agencies that can help locate properties and walk us through the process? How long does it typically take?

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This is a state specific answer for Texas.I am not an attorney nor am I giving legal advice. a contract or contracts that has has a lease to own arrangement with a promise to sell at a later date is considered an executory contract and comes with many caveats. Most of the time these contracts are improperly set up and lead to many problems for the seller and you. If you decide to go down this rabbit hole make sure everything is reviewed by an attorney.
0 votes Thank Flag Link Fri May 17, 2013
Come talk to me, I do have a lender that can approve an FHA as low as 580 FICO score. The rest of the agents that gave you advice were honestly told you that owner finance usually require 10 to 20% down, and you are still a renter, I also had clients whose source of income are coming through disability pensions and they were told that they cannot get approve for a home loan. After thorough interview, these couple told me that they had saved up $10K down ready to pay for a house rental. I coached them not to rent a house, instead, buy a new home. They were finally got approved by our builder and ready to move into a brand new home next month. Call me and let's make it happen (210) 995-2321.
0 votes Thank Flag Link Tue May 14, 2013
I actually like lease-options. They're not right in all cases, but in the right circumstances, they can make a lot of sense and be a win-win for all parties.

However, they're almost impossible to do in Texas. Texas has certain laws that make them nearly impossible, unlike in the other 49 states. So be very, very careful of anyone who's promoting lease-options in Texas. It can be done, but not in the same way as the rest of the country.

There aren't agencies, but there are investors who put together those deals. I know several in Texas. They use a land trust as the vehicle--it accomplishes pretty much the same thing as a lease-option.

If an investor has located a property and then you come along and are happy with the property and the financial arrangements, it can take just a couple of weeks. On the other hand, if you come along first and the investor doesn't already have a property identified, it could take several months.

Hope that helps.
0 votes Thank Flag Link Tue May 14, 2013
Don Tepper, Real Estate Pro in Burke, VA

Not to many owners offer this option. We as agents have separate contracts for this and cannot combine both. You would have to first make an agreement to lease the property for a certain amount of time. Then you would draft a second contract to purchase the home. The owner can agree to credit you with rent paid as a form of down payment. It can get complicated.

You also can do owner finance but owners usually require a large down payment 10-20% and high interest since they are taking the risk being the lender.

Right now if your able to qualify for a loan that might be your best option to sit with a mortgage lender with rates being so low and see how much of a home you can purchase. If you have items on your credit that need to be addressed then my advice is to correct those items first, rent temporarily, and then buy a home when your ready.

I hope this help.
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0 votes Thank Flag Link Tue May 14, 2013
Just an FYI. The use of both a TREC one to four family and a TAR lease do not have the required executory contract disclosures. Without them the seller could face some serious fines. Also to enter into this agreement the property has to be owned free and clear with no liens. If you have any legal questions about these arrangements call the legal hotline or your attorney, Some good reading on this topic is the actual bills that address Lease to own. SB 628 and HB 1823
Flag Fri May 17, 2013
Thank you for your responses and advise! This is helpful.
0 votes Thank Flag Link Tue May 14, 2013
Good afternoon sonya,

Rent To Own is a better deal for the Seller than it would ever be for a potential Buyer.

The basic concept is finding a way to "force" savings towards a down payment by including a portion of the monthly rental that goes towards that savings. You pay your rent every month and your Landlord deducts a pre-determined amount to hold in a special bank account, called an "escrow" account. Your Landlord holds that money until you have saved up enough---through this "forced-savings" method---to meet a down payment to purchase the home.

The terms of the purchase price, including the down payment amount, and the amount to be set aside from the rental for down payment, are all set down at the time of lease signing.

It's all about helping the renter/tenant save up enough money for a down payment to buy a home (in this case, the one you're renting). But this is a better deal for the Seller because he gets to lock in a purchase price and a buyer today for a future sale.

Saving money for a down payment? Well, heck, you can do that on your own.

If you are dedicated to the idea of buying your own home, you can create your own savings plan to save up enough money for a down payment. And when you have saved up enough for a down payment, if that takes a year or two or more, YOU get to decide on the price you're willing to pay for the house at that time based on current market conditions. You won't be locked in to a price that may be a lot higher than what the house is worth in the future.

With Rent To Own you'll be locked in both to the house and to the price, even if it takes you 3 years to save enough through the forced savings of the rent payments. What happens if three years from now your life situation has changed? Maybe you need a bigger/smaller home. Maybe your employment has relocated. Maybe your credit or income is insufficient to qualify for a mortgage loan.

Find a way to save up on your own; not with Rent To Own.

Sit down with a local Mortgage Banker and get yourself prequalified, too. You may find you're better qualified than you think you are, and, if you're not, at least you'll know how much loan your income and credit qualify you for, and how much you have to save towards down payment and closing costs.

Trevor Curran
NMLS #40140

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
0 votes Thank Flag Link Tue May 14, 2013
I tend to try just as hard as I can to talk people out of "Lease to own" Either rent, or buy, but the two shall never meet... Why? I have seen it go wrong way too many times, and I've seen way too many lawsuits.. My advice... don't do it..

Right now, interest rates are in the 3s.. it is ALWAYS a better deal to go buy a home. You will get more for your money, usually the same amount if not less out of pocket, you will gain equity, gain appreciation, and get a tax write off to boot.. With rent... you get nothing but a happy landlord that will thank you ever so much for making their payments for them, and giving them a monthly profit.

But, if your heart is set... I wish you the best, and I hope you wont be counted amongst those that were ripped off and end up spending money in the court system.

0 votes Thank Flag Link Tue May 14, 2013
Rent to own is similar to a car lease. Keep in mind that rent to own can be risky and one could stand to lose a bit of money, therefore do inform yourself well, and consider consulting with an attorney who specializes in real estate beforehand. If you haven't done so yet, visit with any licensed loan officer, see if you can buy outright...
0 votes Thank Flag Link Tue May 14, 2013
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