Philip J. Cunningham Sr
V.I.P. Realty Corporation
7942 Bustleton Ave
You can rent to own. But I always tell renters to stop renting! There is still a loan program here in Pa that will allow you to finance 100% of the home. No downpayment. And in most cases we can aske the seller to help pay closing costs. This is a USDA loan if you wish to look it up.
This is a great way for a buyer to get into a home for little cash out of pocket.
I also want to say that the money needed for USDA / homebuying is less then you need to rent a home. And if we find ther right home you will pay about the same per month as rent !
Let me know if you have questions! Happy to help.
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.
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Lease to own homes are laden with pitfalls for the buyer and an exceptionally bad idea in my opinion. They are not an easy way to buy a home without having the sufficient credit, income, and down payment to do so, as most people seem to believe. Here are some reasons why they are a monumentally bad idea:
1. You'll still have to come up with a lump sum (essentially a down payment) or "option" to enter into the agreement. This is due upfront and is usually a percentage of the purchase price. Plan on $3000-5000.
2. You'll agree on a date when you'll have to exercise the option to buy. Let's say 2 years from now. At that time, you'll still have to qualify for a loan, and have sufficient down payment.
3. If you pay the rent late even once, the seller typically reserves the right to keep everything and void the deal.
4. How do you know the price you negotiate down the road will still be a good deal when it comes time to actually purchase the property? Will you qualify for the financing then? Will it appraise out?
5. You'll be responsible for the upkeep of the property throughout the life of the lease. If the furnace goes out, you'll have to fix it. Same for the roof, plumbing, and everything else. Remember, this is for all intents and purposes now "your" house.
Violate any of the above terms and the seller keeps everything you gave them upfront, and also all of the money credited towards your down payment from each month.
Too much risk, too much money, and too much uncertainty about what your situation or finances will be too far down the road in the future.
Hope this helps!