There are some good answers below that offer arguments for both of the options you mention. But no one really knows exactly your situation. So you almost certainly should talk to one or more trusted advisers. A good place to start is a HUD-approved counseling service (link below). This will be a free service. Don't go to anyone who wants to charge you money.
Your second step should be to talk to a mortgage broker who is willing to work with you over a longer term. The broker can look at your credit report and offer specific advice about improving your score during the short and long terms. Sometimes you can have a significant impact on your credit score by simply having items removed from your report because they don't belong there.
If you are interested in some of the basics about credit scores, you can look at this blog post in which I have compiled advice from a number of good sources. This was written a while back, but I don't think much has changed. http://www.trulia.com/blog/rovtar/filter/category/Credit_Score/56
At any rate, once you have more information, you will be in a much better position to make the best decision.
Prudential Real Estate of the Rockies
If you can't afford to buy conventionally, then Lucie's suggestion of owner financing is good.
The difference, to greatly oversimplify, is that with a rent-to-own, the seller retains ownership of the property until some future point. With seller financing, you own the property from Day 1.
But: Lease-options and rent-to-owns are almost impossible to do in Texas . . . unlike the other 49 states. There are very strict laws on the length and other restrictions that really make lease-options almost unworkable. There are ways to address those issues, but they're pretty complicated. (Having the seller create a trust, putting the house in the trust, then becoming a beneficiary of the trust . . . for instance.)
Another red flag: It's you and your boyfriend. Not you and your husband. It's not that buying becomes impossible, but it's more difficult and you absolutely have to have agreements in place about what happens if the two of you no longer are a couple. Kind of like a pre-nup agreement.
So, particularly in Texas, if you want to buy, then buy. But have a lawyer address the ownership issues and what happens to the property before you buy it.
Hope that helps.
1) Start doing your home work on fixing your credit, hire a great company if you have to help.
2) Talk with a mortgage broker to see where you stand on buying to rent to own and on buying options, make sure you can qualify before you get to far ahead of yourself. You don't went to walk in with your eyes closed to find out later it won't happen....
3) Pay down debits, don't buy/lease a new car, or take out any loans.
3) get some credit cards if you don't have any only put small amounts of money on them each month and pay off balance as soon as bill is cut.
Hope this helps
Don Tepper, Agent, Fairfax, VA
Rent-to-owns and Lease/options are incredible opportunities...for the owner to make lots of money. Very few, actually NONE of which I am aware, EVER become owned by the potential buyer. These buyers exit the situation much poorer than when they entered. Don't become a victim of your impatience. There is one exception to this option that IS beneficial, but we would need an off line conversation for that. Good down payment required.
'For someone like myself who has bad credit...'
You already know what you must do. So get to it.
Use the resource below to identify the best resource for repairing your credit.
You will be able to identify those lenders in your area who grant loans to local buyers and small businesses. These folks will work with you to get you into a home buying status.
Here it is:
Enter your zip. You will find 2 rated "B' and of course "F" for Citi, Wells Fargo, Bank of America and Chase.
Give the 'B's" a call and set up an appointment. By this time next year, you will be able to buy. Don't be robbed!
PS: When it comes time to buy, don't be a bandit, do business with those who are supporting your community.
Best of Success in getting on the road to recovery,
Annette Lawrence, Broker/Associate
ReMax Realtec Group -
Everyone I have spoken with in the last 3 years that have entered into a lease option lost money on the deal. Note that I said everyone! I have not met one winner in the last three years that have done this as a â€œbuyerâ€ only the sellers came out ahead if there was a winner at all. It is a hot topic these days because so many people do not qualify to buy a home right away because of a recent credit issue. That is why so many people are being taken advantage of when they can afford it the least. Some insight contained in the link below, hopefully it will keep you from getting hurt financially. Good luck,
A relatively small number of properties are available on an owner-financed basis. However, you'd need at least 20%-25% down, the interest rate would be higher, and you'd have to qualify for a mortgage to pay off the owner (this is known as a "balloon"), generally in three to five years. Once again, it's not a viable option for most people.
You'll need a FICO score at least in the low to mid 600's, in addition to about 6% to 8% of the purchase price (including a 3.5% down payment) in order to even consider buying a home. Employment and rental histories are also considered. From what you've written, it appears as if a home purchase is a bit down the road for you.
Your first step is to improve your credit ... and don't fall for those "credit repair" pitches. You can do anything they can, without paying some outrageous fee.
I've worked with many first-time buyers on limited budgets. If I can provide you with additional information, or address any questions or concerns, please feel free to contact me at (713) 213-6350 or ... firstname.lastname@example.org. I wish you well.
Your best bet might be to work on the credit.
I give free credit consultations.
Email me and I will reply with a free e-book about credit.
We can go from there.
(214) 763-4629 cell/text/nights/weekends(Really!!)
Lending all across the entire Great State of Texas!!
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