1) You look at homes on the market with special focus on homes that are also for rent and homes that are vacant (owners of vacant homes may be more motivated).
2) You propose a lease-purchase.
3) You write a lease that allows you to rent the property for a period of time. Two years might be enough time to improve your credit enough to qualify for a mortgage. The terms of the lease normally include additional rent above what the current market will bear. If a similar house would rent for $1,000/month you would agree to pay $1200/month for example. The additional $/month would be applied to your downpayment by the owner at time of settlement.
4) During the term of the lease you work hard to improve your credit. As another agent mentioned here, many times the buyer/tenant does not sufficiently improve credit. Try to think about why your credit is not what it could be now and decide if you can afford to address these issues while renting the house you want to buy.
5) A few months before the lease is over you work on obtaining your mortgage. Hopefully you will have been in touch with your lender since before signing the lease and so it will be a simple matter of running your credit again and getting you up to date with the current mortgage programs that might work for you.
6) If you are unable to buy the house, or if you have changed your mind you can simply walk away at the end of the lease (unless there is something stating otherwise in the lease). However, you will not be able to collect the additional rent you paid. This additional rent is the owner's only consolation in the case that you do not move forward with the purchase side of your agreement.
The beauty of the lease-purchase is that it could allow you to take advantage of low home prices. One down side is that home prices could slide further down, causing you not to want to purchase the house. More importantly, however, the interest rate could go up which would mean that the home is no longer affordable for you. For this reason, I do recommend that if you rent-to-own you choose a home that would still be affordable to you at a higher interest rate.
Good luck! I hope you are able to realize your dream of homeownership! It's a complicated process, so be sure to contact a good agent.
We can usually raise most peopleâ€™s credit scores anywhere from 50 to 100 points in just 90 days!
We have been repairing credit for 12 years now and have helped thousands of people. We use the actual laws against the credit bureaus to have negative items permanently removed from the credit reports thus raising a personâ€™s credit score.
Qualify for a home or car!
If you are interested, please call me at 215-333-2200 and I will be happy to tell you more about our program.
Here are a few blogs we wrote about the process. We hope you can gain some insight into the process.
We have a program for rent to own. There are qualifying factors in order to obtain a RTO property.
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Let me know the area and price range you are looking to be in and I will put together a list of places that may entertain a Lease Purchase for you.
Selling in NJ & PA