In order to help, we'd need to know your budget, requirements as to bedrooms and bathrooms, whether there are any pets, if you smoke, your credit and rental history ... these days, landlords are more particular since there are more qualified applicants than available properties.
As for rent-to-own ... I’m assuming that you’re inquiring about the possibility because you do not have a down payment, your credit is shaky, or perhaps both. There are many misconceptions about the procedure, and we get this question quite often.
Texas Realtors are not permitted to engage in this type of transaction. You’d need an attorney to prepare two separate contracts ... one for the lease, the other for the sale.
Contrary to popular belief, you cannot enter the deal with little or no cash. There’s a hefty deposit required (as much as 20%) to validate your intention of eventually purchasing the property. Should you not buy the home for any reason, you forfeit the money.
To dispel another myth, little or none of the rent is applied to the down payment.
Should you proceed with the sale, the owner will generally finance the transaction for three to five years. The interest rate charged is usually close to double what lenders get (at this time, figure around 8%). Within that time frame, you’d have to qualify for a traditional mortgage to pay off the owner in full … it’s known as the “balloon.” If for some reason you cannot obtain financing, or elect not to move forward, the seller gets to keep both the house and your deposit. So adding insult to injury, not only don’t you get your dream home, you have to move out of it, minus a bunch of cash.
All that aside, the Houston market is among the most active in the country, with most homes selling almost as quickly as they’re listed. What incentive would an owner have to offer his/her property on a rent-to-own basis? There’s got to be something seriously wrong with the place … location, condition, etc.
There’s a new variation on this theme out there, whereby a company (usually a lender) buys a home that you wish to lease/purchase. You rent the property, and when you’re able to get a mortgage, the firm sells it to you. There are lots of conditions, and it’s hardly a slam-dunk. Once again, there’s a large deposit, which you would forfeit if you opt not to go ahead with the sale, or cannot qualify for the loan within a given time period.
Whatever they’re called, stay away from these deals. I understand your desire to eventually own a home, but the most significant purchase of your life must be based on sound reasoning and solid financial footing. Continue to lease, work on your credit if need be, accumulate some cash for a down payment, and put yourself in a position where you can comfortably afford the cost of property ownership. You’ll sleep much better. I wish you well.
Trend Setter Realty
I would love to help you in your search and my service are free to you. Contact me to start your home search.
Quinntonia "The Dream Maker" Glover
Real Estate Agent
Realty ONE Group Lone Star
Equal Housing Opportunity