Home Buying in Bronx>Question Details

Tanyadunham13, Renter in Bronx, NY

How do you feel about the Rent to Own program? Is this legit or a Scam please help..?

Asked by Tanyadunham13, Bronx, NY Wed May 8, 2013

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Good evening Tanya,

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
Office: 516-829-2900
Mobile: 516-582-9181
Fax: 516-829-2944
PowerHouse Solutions, Inc.
1010 Northern Blvd, Suite 234
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528

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2 votes Thank Flag Link Wed May 8, 2013
Definitely two thumbs up and the best answer..
Flag Mon May 13, 2013
Wow thank you so much.. This was very informative.
Flag Mon May 13, 2013
Rent to own programs can be legitimate. Call a realtor that specializes in these type of transactions or have your agent provide you with a referral of a property management company that works with rent to own properties. Have all agreements put in writing so everyone involved understands the terms of the transaction and seek out professionals that can assist.
1 vote Thank Flag Link Wed May 8, 2013
As Anna said, rent to own is very, very risky. You MUST hire an attorney for this type of transaction.
1 vote Thank Flag Link Wed May 8, 2013
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...
1 vote Thank Flag Link Wed May 8, 2013
Hi Tanya,

Rent to own is legit but very rare to come across by and is it very risky due to many terms as mentioned by Trevor Curran below. An attorney must assist you with this type of transaction to protect your best interest. I suggest either just renting or buying a home. Good luck!
0 votes Thank Flag Link Mon May 20, 2013
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