Do you guys have rent to own homes ?

Asked by Amber Riding, Indianapolis, IN Tue Mar 11, 2014

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Annette Law…, Agent, Palm Harbor, FL
Mon Mar 17, 2014
Papi,
Your best choice will be Rent while you become qualified to buy homes.

Dig trough my Trulia blogs and you can read why this market no longer exists becuase of the EXTREME risk to which the owner is exposed. Rent to own, or Lease/optons are as risky as manufacturing fireworks in a warehoused heated by a wood stove. It is not a matter of if it will explode but when. A owner under the new rules would be foolish, actually worse, to offer this type of financing to anyone.

Now, as the shelter seeker, you need to read Jim's response slowly. It simply isn't going to happen. Acutally, the predation Jim refers to is WHY the new rules are in place...to PROTECT you by bankrupting the owner. Rent to own and lease options have overwhelmingly proven to be predatory.

What you will do.
You can enter into a rent agreement with a FORCED saving component. A additional amount of what you pay for rent will be used to put in a Certificate of Deposit that is in your name. (NO CONTROL INTEREST IN THE PROPERTY) It creates sufficient forced savings to pay for the UHaul when it is your time to find a new place.

Pick up the phone and give a Indianapolis REALTOR a call and discuss your long term goals.
The REALTOR will introduce you to a lender who will create a plan that will get you qualified for a home mortgage. This plan will include:

1. reducing your debt
2. increasing your income
3. establishing a budget
4. living below your means
5. saving money
6. paying bills on time

It 6, 12, 18, 24 months you can become a property tax paying home owner like many others.
Those who seek means to circumvent the protections in place for their benefit will purchase an expensive education.

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes
, ,
Mon Mar 17, 2014
Good morning Papisnoop,

Rent To Own is a better deal for the Seller than it would ever be for a potential Buyer.

Key Points of Rent-To-Own:
• Portion of monthly rent payment is set aside by Landlord towards a future down payment
• Landlord/Seller locks you into a price today for a purchase tomorrow
• Forces the Tenant/Homebuyer to save towards down payment
• Tenant/Homebuyer still has to apply for a mortgage in the future to purchase the home
Rent-To-Own "forces" savings towards a down payment. Your Landlord deducts a pre-determined amount to hold in a special bank account, called an "escrow" account until you have saved up enough---through this "forced-savings" method---to meet a down payment to purchase the home.
At the end of the agreement, usually 2 to 3 years, you must apply for a mortgage loan to complete the purchase of the home. The terms of the purchase price, including the down payment amount, and the amount to be set aside from the rental for down payment, are all set down at the time of lease signing.

You can save for a down payment on your own.

If you are dedicated to the idea of buying a home, create a savings plan. When you have enough for a down payment YOU get to decide on the price you're willing to pay for a home based on market conditions.
With Rent To Own you're locked in to the house and to the price. What happens if three years from now your life situation has changed? Maybe you need a bigger/smaller home. Maybe your employment has relocated. Maybe your credit or income is insufficient to qualify for a mortgage loan.

Get Prequalified by a local Mortgage Banker. You may find you're qualified now for a mortgage loan.

Trevor Curran
NMLS #40140

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
0 votes
, ,
Mon Mar 17, 2014
Does this sound familiar? I don’t qualify for getting a mortgage from a traditional lender so I am going to “work around the rules.”

Get to know the seller very well before you give them your cash and kiss the non-refundable deposit good bye. According to one of my closing attorneys 97% of rent-to-own real estate deals do not result in a transfer of title to the “buyer” and that is when they have a well written contract. If the contract conflicts with the mortgage guidelines the buyer cannot get financing when it is time to pay the seller so the number drops to zero when that happens. Buyers do not take the time to research what happens when the lease option period is over, the just expect it will be okay. That is not how it works.

Anything you do to try and circumvent the mortgage guidelines that are in place to protect you is like playing Russian roulette.

Good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
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.
0 votes
Ken Gerrans, Agent, Naperville, IL
Mon Mar 17, 2014
Papi,

Usually, this means that the prospective tenant/buyer has either a subpar credit score or no down payment.

If you have good credit and 5% down, you can buy now...and you should. Analysts predict interest rates over the next year. So, the cost of borrowing is only going up. Lack of available housing inventory in many markets will create higher demand and...rising prices.

The problem with these rent-to-own deals is that they're set up to benefit the seller, not the buyer. The seller will expect one or more of the following: a rent "premium" meaning that you would be paying above market rent, a large, non-refundable amount which you stand to lose if you aren't able to fulfill the terms of the contract, the landlord will hold your "down payment" until you are ready to purchase.

All of these things cost you more money. Then, there is the issue of price. Do you agree to a price at the beginning of the lease term? If so, how do you know what the home will be worth in 12 months or 24 months? Again, the owner will want you to pay "his" price if he's accommodating your needs with a deal like this. You have very little bargaining position.

Then, let's use a 24-month lease/purchase as an example...what happens if your market declines? Your purchase price won't stand up to appraisal...then what? Now, you can't fulfill the terms of the contract and your landlord is holding your money.

There are ways to make it work...writing the agreement to make the transaction contingent on the property appraising at selling price...but, it's unnecessarily sticky.

I would advise renting until you're ready to buy, if that's what you need to do. Otherwise, buy now.

If you find a home you'd like to rent, ask the owner if he would consider selling at the end of the term. Talk about it when the time comes...when you're not compromised by whatever situation is causing you to look for rent-to-own because it's never going result in favorable terms for you.

Good luck.

Sincerely,

Ken Gerrans
john greene Realtor
0 votes
Michael Mcco…, , Indianapolis, IN
Wed Mar 12, 2014
we at carpenter dont have rent to own homes.can i ask a few questions why a rent to own? do you have credit issues? with changes going on so fast in the mortgage market if it is a credit score problem i would be happy to work with you and get a true view of your credit to see what can be done to get you on track to buy a home

mike mc cormick
carpenter realtors west
495-0452 cell
240-6420 office
0 votes
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