Home Buying in 20772>Question Details

Peter Osborne, Home Buyer in Upper Marlboro, MD

Rent to own, owner finacing options

Asked by Peter Osborne, Upper Marlboro, MD Sun Jul 15, 2012

I want to start exploring getting into a home. I have looked at rentals and then rent to owns and now I have been in touch with a company that does owner financing.

My particulars.
Bankruptcy: filed Sept 2010-discharged Jan 2011.
I was laid off a job in Mar 2010 (salary $75,000 bonus)
Hired in Jan 2012 (salary $68,000 bonus)
Current obligations total @ $575 (auto and credit card)
All 3 credit bureaus show me at 661.

The company I talked to said a rent to own would be @ $3500 option money and @ $1500 month on a @185,000 townhouse.
The same house under owner finance would require $5000 down and payment would be @ $1175 (30yrs at 4.99%), house being financed @ 105% of value.
The kicker is I have to submit the $5000 to get going, and if not approved they would refund all except for $1000. The company is in GA and I am a little skeptical @ sending my money so far away.

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Answers

4
First, there are a lot of rent-to-own/lease option possibilities (and companies that do that) in PG County. I'm not sure of the Georgia company's strategy or business plan. That doesn't mean they're not legitimate, but I'd stick to something local if I could.

Second, check with conventional lenders. Yes, that bankruptcy is a major problem. But your credit scores are OK and obviously improving. (Though I'm puzzled that all 3 bureaus show an identical score; that's highly unusual.) You earn a decent salary with low current obligations.

Third, I get nervous about the financing at 105% of value. It could work and, obviously, with owner financing you don't have to have the house appraise over a specific number. But what it does mean is that you'll start off with negative equity, and it'll take you longer to get above water and--if you want--to refinance with a conventional mortgage.

Fourth, I don't like the $1,000 fee if "not approved." I understand application fees, of course. But someone serving as an intermediary in a lease-option or owner financing should know beforehand whether the applicant qualifies.

I like lease-options and have written a blog about how to find them: http://bit.ly/findaleaseoption But I'm not sure that the Georgia company is the right one to deal with, or that you really need a lease option at all.

Again, check with a good lender and a good Realtor for more help.

Hope that helps.
1 vote Thank Flag Link Mon Jul 16, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Find a place to rent. Work on your credit. Buy a home when you can get traditional financing.
1 vote Thank Flag Link Mon Jul 16, 2012
Don't walk, run away from these folks and contact a good local lender for assistance and advice. If you are skeptical there is a reason. There are instances where you can buy a home in as little as two years after a bankruptcy but it would be with normal downpayment terms and interest. Hang on a couple of months and see if you can secure regular financing. I would NOT give these people $5,000 up front. No lender requires payment until settlement!
0 votes Thank Flag Link Mon Jul 16, 2012
The key to Rent to Own or Seller Financing is the actual written agreement. Always review the agreement and have your real estate professional review the agreement prior to signing or submitting any money. Also, there are plenty of local Rent to Own or Seller Financing opportunities locally so unless you were planning to move to Georgia, you should select a property that has local representation.

If you google "Rent to Own in Upper Marlboro, MD", our video comes up number 1. My name is Melvin Yates and we specialize in Rent to Own and Seller Financed Properties in Maryland and Washington, DC. Please feel free to email me at Melvin@GradyProperties.com.
0 votes Thank Flag Link Mon Jul 16, 2012
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