There are down payment assistance programs now available to help buyers.
call me iif you wish tro discuss.
Gregory Suiter Realtor Homesmart 602+4897-1025
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.
*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
Search some of my past answers for a more detailed explanation.
Basically, the requirements are whatever you and the owner agree to. Often, lease-options run 3-5 years. You usually provide a small up-front option fee, generally in the range of 2%-4%. That's generally credited to the purchase price if you buy; you don't get it back if you don't buy.
Often, a percentage of your rent (generally 10-%-25%) is credited toward your purchase price if you buy. You don't get that back if you don't.
The price of the property is almost always set up front.
The one key is that at the end of the option period, you'll have to go out and get a conventional loan. So even if your credit is weak today, it'll have to be improved enough to qualify for a loan by the end of the option period.
Have a lawyer assist you to provide some needed protections. For instance, you don't want the owner selling the property to someone else. (First right of refusal, mentioned by someone, is worthless.) You don't want the owner going into foreclosure; you'd lose your option. You want to protect yourself if the house isn't worth the agreed-upon price at the end of the option period. And so on. There ARE solid protections addressing each of those.
Here's a link to a blog I wrote on how to find rent-to-own properties: http://bit.ly/findaleaseoption
But, again, to answer your specific question: There are no set requirements. It's whatever you and the seller agree to.
Hope that helps.
Your question has a dozen responses already so this may come of little use to you now. But if you are looking for more information on how rent to own works for a buyer, checkout one of these resources:
Beginner's Guide to Rent to Own
Article on "How Rent to Own Works"
Rent to own always favors the seller. If you walk or do not qualify for a loan in a set period of time you may lose everything you invested included the high down payment requested upon inception of the lease purchase.
You may want to consider a lease with option to purchase at a set price at end of term. Know all your options.
Feel free to contact me direct with a few ideas and suggestions.
Sometimes attending 2 days of hud schooling allows you 10-15 thousand no interest no payment assistance and with 4k you can usually buy a home then first payment starts getting you equity-
rent to own only 20 percent usually become renters home-
To discuss more call me 6023-487-1025 35 yrs experience - third generation realtor.
With some of the negative out of the way, sometimes they do work if the circumstances are right. I would encourage a frank discussion to determine your situation and needs before telling you its the right or wrong thing for you.
Sometimes they work!
Lease/Rent to Own
1. Lease with option to convert a negotiated portion of the lease payment in to a future purchase, forfeited if purchase is never made.
2. Usually, with right of first refusal on a future purchase (this is negotiable)
3. No set price for a future purchase as the owner will look for the then market price if renter chooses to purchase
Seller May Carry (another option)
1. typically need 20-50% down for interim financing (3-5 years) with a balloon, providing time for buyer to get a mortgage loan
2. Lower the down payment higher the interest rate
4. Often sold at higher than market prices as people that cannot obtain a loan nor have cash are willing to pay more. The seller is compensated for taking the extra risk and having to wait for their payment.
Call with any questions, see (Seller May Carry) homes for sale: http://link.flexmls.com/ub7k1q5dnm5,12
Jeffrey Masich, Realtor, GRI, MBA
Arizona homes and land for purchase or sale
Please let me know if you have any additional questions.
Sean Heideman, Broker
You are desperate!
Your Credit or Finances, or both, will not allow you to go the conventional route:
You need the Seller to help you out!
The Seller will know it, and you are going to pay dearly for this service:
There aren't too many altruistic Sellers out there.
There is no FORM printed by anyone; there are just too many variables.
The terms that can be written into a Lease/Option can be dangerous to you:
How long is the Option period?
How much money are you putting in to the Option?
What happens if you are not able to execute the Option?
How do you know what your financial situation will be 2-5 years from now?
How much is the rent in the meantime?
Who will be responsible for maintenance and repair in the meantime?
What will be the Market Value of the home in 2-5 years?
What will be the Selling price 2-5 years from now?
This is the Ultimate Caveat Emptor!