NMLS # 6395
Financing Kentucky One Home at a Time
Your first step should be shopping around for a mortgage broker that can explore all your finances and advice you properly. If he/she can provide you with a pre approval letter for mortgage, you know that now you can be able to buy a home instead of rent to own.
This first step is very important because if you do not qualify for a mortgage now, probably you can not qualify for a mortgage a year from now. Getting into a lease with option to purchase will require that you leave a deposit that it is not refundable if you do not qualify to buy the property at the end of this contract.
If you still decided to do a lease with option to buy, hire an attorney to review and advice you before you sign any agreement.
Best of Luck,
A lease opton or rent to own is comparable to sitting down at a card
table at your local casino. You put money up now (and over a period
of time) betting that you can purchase at a future point and the seller
(the house) bets they are making a better deal(the best being you
or more in 4 years, the seller is betting it won't be worth that much---
truthfully the option price they agree to is going to be influenced by
their idea of what it will be worth in 4 years---they aren't going to be
willing to give up all of "their" appreciation.
Just remember the rule for sitting at the table----don't put more money
on the table than you are comfortable in losing.
I pulled some data off a site that lists "lease to own homes" see what you think:
Lease Option Details Rent = $1,580 Rent Credit Towards Purchase = $260
Option Payment = $8,450
Option Price = $169,000â€¦
Lease Option Details Rent = $1,495 Rent Credit Towards Purchase = $300
Option Payment = $12,000
Option Price = $185,000â€¦
In my opinion the option prices are high for these homes.
You might be able to find an owner financing situation, but usually that requires 25% or more down and they will look at your credit too, seeing as you walked away by choice they too may decide not to take the risk with you.
Save what you can until you can buy again and get a fresh start.
I can refer you to a great company. I agree with the other agents below, it's good to be cautious as there are many scams out there. I would also exhaust all of your efforts to find out if you have any other options before deciding to rent as you are aware is not the best use of your money. I can recommend a couple of good places to start. Feel free to give me a call and I'd love to help you in finding the best option for you.
Realtor At Jill Lakomy & Associates
Keller Williams Realty
You should explore outright purchase, nowadays FHA has programs for lower FICOs even in the low 600s.
However, if you are sure about pursuing lease option programs, go with a reputable company. Waypoint homes is such as company, started by hedge fund managers. They bought hundreds or even thousands of homes rehab them and rent them out with a lease option. http://(www.waypointhomes.com).
Hope that helps,
Bethany Real Estate and Investments
There are a number of websites that can be found by googling "rent to own" or "lease to own." I cannot recommend any as particularly good and you should definitely be careful to check out anyone you contact through any internet website. There are lot of scams out there involving real estate! Whatever you do, I suggest you visit no properties unless you have someone to go with you, perhaps more than one person. And always have an attorney look over the lease/own agreement and explain it to you. I will be money well spent. If nothing else, it will give you some peace of mind. I also agree with Ramona that a local property management company may have some ideas or even some listings for you to look at.
The option agreement most commonly lists a nonrefundable amount of money that you give to the homeowner for the RIGHT to buy the home during a specified period of time, and at a specified price. If you do not exercise your option within that timeframe they do not need to honor any purchase agreement and can keep your money. This is similar to a stock option.
If the homes go up in value then you might, as the buyer/tenant, assume that you can buy the home at a less expensive price, having secured the property while trying to save for your downpayment money, or improve your credit. If the homes go down in value, then you probably won't exercise the option and be out the option money. In either case, the seller feels that the tenant/buyer will keep the home in better condition as they hope to own it one day....thus being a better tenant.
If you don't have to put up a significant amount for the option it might be worth the risk, but often is not. There are lots of things you should do to investigate the property, the ownership rights, etc. before you hand them a check.
To give you a small, beginners amount of knowledge--rent to own only benefits the seller. The buyer is required to put down an amount of money (called an OPTION) that is NOT refundable, should you not be able to purchase the home.
You will be given an amount of time, 1-5 years--the shorter the better for the seller, so that's what they go for--to refinance the home into a loan in your name. If you can't complete the terms of the purchase, you LOSE your option money and the home is returned to the landlord (i.e., the seller).
Why not contact a reputable lender, like Vitek, and run your credit and see what you qualify for in a purchase scenario. Or, if you don't qualify, at least you'll know what work has to be done on your credit to purchase. Chances are, if you can't purchase in the next two or three years, that rent-to-own seller is going to make alot of money off of you.
GOOD LUCK. Choose smart, and get a Real Estate attorney to review any rent to own contracts.
Whatever you do, do your research and find a trusted partner in a REALTOR.
I just had clients ask about this and I always recommend they speak with a Real Estate Attorney before considering something like this. It is EXTREMELY RISKY for you, with little risk for the Seller/Owner. You can easily locate Real Estate Attorneys online or on Yelp. It is always BEST to know this laws and how you are (or aren't!) protected when it comes to these types of business deals.
A better idea would be to work with a loan officer, or a local credit repair company, and work towards repairing your credit so that you can buy with a traditional mortgage.
RE/MAX GOLD RE
We have a lease option program we call it Mortgage Alternative Program... This is how ours works...Minimum fico 500, 50% Debt to Income Ratio, 5% to 10% down, determined by your credit score... You find a home up to $2,000,000 that you would like to purchase... We will purchase that home for Cash... The lease payment is based on a 5% interest rate... You will have 6 years to exercise your option to purchase... The purchase price will increase 1% per year... We have a website that has a PowerPoint presentation that will give you all the details. http://www.shortsaleanalytics.com look under services.
or you can reach me at 858-945-1047.
Is it the agents below who, according to you "mean well" but don't really know what they are talking about, as it is "way outside their box"????? (not too condescending).........., or........the consumer who asked the question in the first place, over a year ago?
I don't think you accomplished either of those potential objectives.........
Wonder if the poster tried the "rent/option" route and, if so, how well it worked for him.
There is a common thread that runs through all of the forums online where consumers ask about these kind of "rent to own" arrangements.....they usually share similar situations:
1. they are desperate to own a home and stop "paying rent"......they want to buy, even if they can't currently buy in the traditional way
2. they are on some kind of financial thin ice - maybe have little or no savings, or more often, poor credit...too much debt, etc......and cannot qualify for a loan
3. they are misinformed and think that rent-option simply means they pay rent and then, at the end of the lease, all the rent is applied to the purchase..... they buy the home, and all is right with the world.
Very few of them understand, when they first ask about it, that they could possibly, and very likely, lose that option money and "extra" rent they will be asked to pay over and above the normal rent. .
They also don't realize they will have an extremely limited number of homes from which to choose as most sellers who want to sell, and CAN sell, sell now not later.
The companies or individuals who offer these kind of (schemes) I mean arrangements, are not looking to help humanity - they are looking to help themselves make money.
So.....in my humble opinion, consumers NEED the agents - who responded below with advice and caution - to spell out exactly what the potential dangers and pitfalls might be with arrangements like that!
Thumbs up to them from me!
Top 5 Reasons Agents Don't Recommend Lease Options:
1. It's way outside their box of how a real estate transaction should look like.
2. They hear the horror stories (never the whole story) and believe them all12 to be true.
3. They want to protect their client but don't know how to in a Lease Option. To be fair, IT IS RISKY and
no one is teaching them!
4. They don't know how to get paid with a lease option. They should get paid, it's their license and their
brokers license on the line.
5. They don't know how to qualify a buyer/seller as a good lease option candidate.
Again, they mean well and they are right, BE CAREFUL!
Hope that helps!
Keisha Mathews, REALTORÂ®
CDPEÂ®, HRCÂ®, HAFAÂ® Certified
"The Short Sale Lady"
Century 21 Landmark Network
(916) 370-1803 cell/direct
(916) 405-3886 fax