Let's say for some reason you can't get your credit up and so in 1-2 years you can't get a loan and the interest rates are higher so you have no chance. You can't buy the house as your rent to lose contract says and so you lose the money you added to the payment each month and the deposit. Just don't even consider it, you are more apt to loose more money with rent to lose.
The most common types of non traditional mortgages are owner financing, lease purchase and rent to own. Generally a seller willing to consider owner financing or lease purchase still requires a significant down payment. Rent to owns are rare. This means that there is no down payment just the rent + a premium that goes to the purchase price.
Lease purchases and owner financing are out there and are usually offered when the seller is not able to sell the property at the price they want.
These types of "financing" can work but I have found that some are rigged to have the buyer not succeed and lose down money or the additional rent. This can happen if the seller requires that you get your own mortgage in a very short amount of time. Other times the price of the property are extremely high or the interest rate is excessive.
One also needs to check that the seller is not in financial difficulty and in danger of losing the property. If that happens you will lose all that you have invested.
That being said your Realtor should protect you against many of these pitfalls.
Lease / purchases do work but they should be entered in with caution.
Please contact me if I can help you furthur.
Century 21 Park Road
You end up usually having to agree to purchase the house at the price that the seller couldn't actually sell it for (that's why they're offering rent to own, they need to get some income coming in in order to pay their mortgage but they can't sell the house for what they want or need for it); you typically are required to give a non-refundable deposit down on the house, which you don't get back if you don't buy the house, regardless of what the reason is (suppose you can't fix your credit by the time you are required to purchase!). The seller isn't agreeing to hold the mortgage for you - that would be private financing, which most sellers aren't interested in since they aren't banks or lenders and don't want to wait for 30 years - instead Rent to Own is usually a rental contract with an option or agreement to purchase the house within a stated time period, 2 - 3 years, by which time you have to qualify for a mortgage and buy the house. But if interest rates shot up and you wanted to wait for a couple more years until they dropped - the seller would have to agree to extend the contract, otherwise you'd lose your deposit and have to leave the house because the seller would now put it back onto the market.
Truly, I advise people all the time to just take the time to fix their credit (which can usually be done in less than a year, even for pretty bad credit) and then purchase the house of their dreams.
Hope this helps - if you want more information on Rent to Own/Lease Purchase, do feel free to give me a call and I can give you a bit more info on it. You can usually reach me on my cell at 610-207-0172.
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