You are desperate!
Your Credit or Finances, or both, will not allow you to go the conventional route:
You need the Seller to help you out!
The Seller will know it, and you are going to pay dearly for this service:
There aren't too many altruistic Sellers out there.
There is no FORM printed by anyone; there are just too many variables.
The terms that can be written into a Lease/Option can be dangerous to you:
How long is the Option period?
How much money are you putting in to the Option?
What happens if you are not able to execute the Option?
How do you know what your financial situation will be 2-5 years from now?
How much is the rent in the meantime?
Who will be responsible for maintenance and repair in the meantime?
What will be the Market Value of the home in 2-5 years?
What will be the Selling price 2-5 years from now?
This is the Ultimate Caveat Emptor!
Good luck and May God bless
Yes, rent to own can be risky... as others have stated, the option to buy must be in your plans and budget, or you will lose out on inflated rent and probably a large deposit, even if the deposit is lower than you'd have to put down on a mortgage payment to purchase upfront. And another risk I see mentioned here is the selling price of the home in 2 to 5 years... Ron lists many questions, and these are all very pertinent questions that I agree must be asked. But I don't think rent to own is hopeless, nor do I think it is a bad option. In fact, I think it's a great option if you really need to get into a home (some of us need to own a home due to circumstance, like new additions to our families, especially if they are unexpected). So with that being said, there are ways to successfully rent to own if you play it smart, do your homework, get the assistance you need to make sure all of the questions listed by Ron get answered, with satisfactory answers....
It's all in the written agreement, and enlisting the help of an expert is the way to go... creative financing solutions do exist, and you'd want to go with an independent broker or investor for the best outcome. This is simply because they have more experience that will be better for you than going it alone. Do your homework though, and find an investor that has experience with arranging mortgages and who understands contracts. You need a good negotiator and go between working for you to make sure the transaction is beneficial for everyone involved, and no hidden surprises in that contract. Also, someone who's willing to coach you on building up that poor credit so you ensure you are able to purchase the home in the long run and don't lose out on any of your money.
Check these guys out, they are based in New York and they helped me out. Were fair and found me the home I wanted. http://www.rent-to-own-homes.biz/rent-to-own-buyers/join-our
You can submit your info on the home you want to them and they will be more than happy to connect you with an interested seller. Hope this helps, and best of luck to you!
Have a great weekend.
CEO & SR Credit & Mortgage Consultant of
Ex-Mortgage Broker of more than 10 years
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.
PowerHouse Solutions, Inc.
1010 Northern Blvd. Suite 234
Great Neck NY 11021
Licensed Mortgage Banker â€“ NYS Dept. of Financial Services
*If you thought my answer was helpful, please give me a â€œThumbs Upâ€ or â€œBest Answer.â€ Thanks!