My limited research indicates about 97% of rent to own transactions do not end up with the buyer receiving title to the property. There are many reasons but the largest is that most contracts conflict with the mortgage guidelines so the buyer cannot pay off the seller by getting a mortgage when the time comes. ALL buyers believe the contract is between them and the seller, which is true until you reach the end of the contract and it is time to pay off the seller. The mortgage underwriter MUST follow the guidelines for the loan you use when that time comes. If the terms of your lease option conflicts with the guidelines, the loan must be declined. Millions if not billions are lost every year by people that try to circumvent the system that is there to protect them.
Another common mistake is the buyer uses a best case timeline instead of a worse case, huge mistake in the real world, stuff rarely gets fixed smoothly. It is hard enough getting to the closing table when all of the ducks are in a row, the lender has approved the loan request and everyone is on the same time line. “When am I going to be eligible for a mortgage loan?” Well intentioned loan officers will answer that question based on the single piece of information you provide. That is not how the underwriting process works, the application is reviewed in its entirety. Don’t let that burning desire to own a home deceive you. I get several calls a month from someone that believes they are now eligible because of some timeline, only to discover their timeline is just beginning.
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Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.