Home Buying in 60302>Question Details

Erik, Home Buyer in 60302

Interested in Lease/Purchase or Rent-to-Own in Oak Park.......

Asked by Erik, 60302 Sun Apr 27, 2008

Currently living in Oak Park. Have already been pre-approved for a FHA loan but and have the 3% that is required but we would require more down to have a mortgage payment that we can live with. Where or who would I go to find out if there are properties in Oak Park willing to rent-to-own?

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Both of the previous answers had some very helpful information. The most helpful information is that EVERYTHING IS NEGOTIABLE!!! Personally, I haven't dealt with FHA for probably about 10 years now and I know that even in the past 6 months ALL financing has changed a lot. But based on my years as a consumer buying, selling and financing my homes and my experience with FHA, lease/purchase or rent-to-own might require the same level of negotiating (being just as easy or just as difficult) as buying via FHA.

My experience has been, when you buy a house via FHA, the homeowner MIGHT have to spend a good chunk of money fixing the house up to meet FHA standards. This becomes cash out of the seller's pocket with the chance that the sale won't close. Granted, disclosure laws and home inspections have changed a lot in the past decade so this situation occurs more frequently than it used to even with conventional loans. However, because this is a buyer's market, if you are the only buyer a seller has received an offer from and they really need to sell the home, they will be willing to make the investment to make the deal happen.

On the flip side, let's say a seller has a home in need of repairs but she doesn't have the money to make improvements. Because the home has orange shag carpet and 70-year-old, dirty, lace curtains, the home hasn't sold for over the past year plus that it has been on the market. The homeowner had to move out into a nursing home or with family. She can't even afford to pay her most recent $3000 tax bill and her monthly $500 mortgage payments. The house is not in foreclosure (yet) and is listed for sale at a bargain price of $200,000 - which would be $6000 down and monthly payments of about $1750.

You, through a Realtor qualified in negotiations and a Real Estate attorney, offer to buy the house for $200,000 in one year, put down a non-refundable $3000 deposit so that she can pay her tax bill and you pay $1000 a month so that she can pay the mortgage and the next tax bill. You agree that you will do $750 per month worth of work to improve the home that will go toward prepayment of your down payment next year. By the time you close, you will have the original $3000 down, another $9000 in credit and you should be saving the other $3000 along with $500/month. This will now give you 10% down and a home that is worth more than $200,000 because you have made improvements.

The first month, you do 10 hours of manual labor per week including tearing up the carpet. The second month you have to spend real money and pay $350 for a dumpster for the carpet, rent the sanding equipment, and other supplies and also do 5 hours of labor per week. As you can see, this is very doable and is win-win for everyone.

The moral of the story is, look for homes regardless of whether the seller will accept lease or options or FHA or even owner financing. And then make an offer that works for everyone.

Good luck,

P.S. Some of the above information (mostly numbers) is based on an actual home for sale in Oak Park, other information (mostly situational) is fictional (although highly likely).
2 votes Thank Flag Link Tue May 6, 2008
Ruthless, Other/Just Looking in 60558
In Oak Park you will really need to contact a realtor to help you through the deal. Your approach will vary depending on whether you are looking for a home or condo. A realtor will be able to contact homeowners on your behalf and negotiate you the best terms. Feel free to contact me here at Trulia or by email at rick.szekely@bairdwarner.com
1 vote Thank Flag Link Mon Sep 28, 2009
In order to find properties in which the owner is willing to offer a rent-to-own, a lease-option, or similar, you've got a lot of options. Very few will be listed in the paper or even in the MLS. However, there are dozens of ways (many with the assistance of Realtors) to find them.

Here's a link to a recent posting of mine with a dozen or more ways to find lease-option and rent-to-own properties: http://www.trulia.com/voices/Home_Buying/How_can_I_find_opti…

Finally, in reference to another posting here, the time frame for a rent-to-own is negotiable. For a number of reasons, it should be for at least a year. I know of rent-to-owns that have a time frame of 2 years, 3 years, or even longer.

Hope that helps.
1 vote Thank Flag Link Mon Apr 28, 2008
Don Tepper, Real Estate Pro in Burke, VA
The question might be if you are a first time home buyer. Many states such as New Mexico have first time home buyer programs that will help with the down and some closing costs.
0 votes Thank Flag Link Sun Aug 9, 2009
Hi Erik. I am a mortgage broker out of Bolingbrook. I know you are already pre-approved but give me a call. Maybe I can offer a better rate and help out on that payment. 630-330-2229. Good luck!
0 votes Thank Flag Link Thu Jun 19, 2008
Most rent to own situations would require you to buy within a 1 year period. So you will still be in the same situation as you are in now. The only thing that may change is the downpayment that you will be putting down. Consider that for every $10,000 you put down on a home, it will only change your payment by $70/ month. So putting more money down may not put you in a better situation. You should also take into account that there are more homes for sale then homes with a rent to own option. So you would be reducing the choices that are available at this time. To find these rent to own properties you can look in the local paper or get in contact with a realtor who may know of sellers that would be willing to accept a rent to own situation.
Web Reference: http://www.JohnSommese.com
0 votes Thank Flag Link Mon Apr 28, 2008
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