Home Buying in 08085>Question Details

Nsec, Home Buyer in 08085

what are the criteria for purchasing a home through ren-to-own option? I'm thinking this would be my

Asked by Nsec, 08085 Thu May 7, 2009

preferred mode of buying.

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here are some basics:
(1) you put down a deposit(usually 10% of purchase, price,but negotiable)
(2) you agree to purchase the house within a certain period of time(usually 1 year,but again negotiable)
(3) you pay a rent which must be above market rate
(4)The deposit and extra funds are put into an escrow account which is used to build up your down payment
(5)At the end of the lease period you take your escrow funds and go to a conventional lender to obtain financing
(6) if you do not purchase,you forfeit your escrow funds

of course,the terms can vary from situation depending on what you negotiate with the seller. You should realize that this is usually more expensive in the short run than just renting or a straight purchase. this can be tricky & you can stand to lose a lot of money if things do not work out. if you are planning to go this route,you really need to work with an experienced agent who can negotiate the best terms for you & look out for your interests. This option is best for people with good income but poor credit.i
1 vote Thank Flag Link Thu May 7, 2009
There are 2 different ways to "rent to own"
One is a lease/option,
The second is a lease/purchase
The biggest difference between the two is that with a lease option, you have the OPTION to purchase at the end of your lease term.
With a lease purchase, you must purchase the home.
The leases are written up differently.
One of the downfalls can be for a tenant, that in a down market (check to see what your specific local market is doing and where the predictions are as to where it is going) by the time you purchase, the house may not be worth the price you set when you signed the lease. Therefore, the bank will not loan you the $$$.
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Tue May 12, 2009
Beyond that,you could be evicted if you miss even one payment.
0 votes Thank Flag Link Fri May 8, 2009
I'll add a warning -- make sure you read the contract very carefully and understand everything in it *before* you sign. Sometimes a clause will state something like if you're late with any payment, even one day, the ownership of the property reverts to the seller/landlord, and you not only lose any equity you've accrued, you turn into a renter. Just be careful.
0 votes Thank Flag Link Thu May 7, 2009
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