It is important to remember that if you do not purchase the property, the downpayment you made toward the house will be forfeited. You will want to be sure you want to purchase the property before getting into a rent to own situation. You will likely also be responsible for all repairs to the property during your stay there. This is just like purchasing the property from the bank except the you are working to be able to get the mortgage while you are staying there. You will also want to be in constant contact with your mortgage broker or credit repair specialist to make sure you stay on track to get the loan for the property within the time frames specified.
Questions you should ask are, what happens if I don't get my credit repaired in the amount of time specified. Our answer is typically, if you are taking care of the property, making your payments on time, and sincerely working on your credit, the time can be extended. It is important that the company you are working with is credible and they do not just move you in because they want the money, but that you are earnestly working on your credit and you will purchase the home. Typically, we write the lease for 1 year with the option to extend it based on circumstances.
Some things to watch out for are to be sure this is the house you want. Be sure you contact a mortgage professional or credit repair secialist and work on your credit. ALWAYS make your payments on time, even to "small companies" and never be late. This will drag your score back down. ALWAYS be on time or early with your payment and take care of the property as if it is yours...or better yet, take care of it like it is someone elses. Read your lease thoroughly and make sure you know what you are responsible for and get a home warranty if you are responsible for repairs. It's better to pay $350 to $400 a year than $4,000 if the HVAC goes out and you have to pay for that or move out because you can't and thereby lose your downpayment.
Lease to own properties are great for people who want to move into a house as their own but can't get a mortgage right now, but you have to do your homework and work with a company you trust. Just be smart about it. Call me if you have other questions on rent to own.
The Palmetto Real Estate Group of SC
There are several different ways that rent to own can work. In all cases it would be predetermined how much of your monthly rent would actually apply to some predetermined purchase price. I'm sure it varied from state to state, but some common methods would be lease-purchase, lease with an option to purchase, seller carry, etc. Often times too, a Seller will have an expectation of a down payment on the front end, and some set date in the future by which to close on the property. You should consult with a Realtor in your area to see what options may be available for you. Are there any other specifics we can help with? Thanks!