First of all, there are almost no rent-to-own homes available. In the current market, it doesn't make sense to a seller to do a lease-option. If you are looking for a lease-option because you donâ€™t have a down payment, then you may be out of luck until you can secure the funds for your down. A good lender and/or realtor may be able to coach you in the various options available.
If you are serious about getting a home, here are the steps to take:
Select a Realtor. Make sure itâ€™s someone familiar with the area you want to live in and with a large amount of closed transactions in the past 12 months. The average Realtor (typically 85%) closes less than 6 transactions a year â€“ you donâ€™t want to be working with someone with that little ongoing experience in the current market. Interview at least three top producers â€“ pick the one that is the best fit for you.
Meet with a lender to get pre-approved. Your Realtor will more than likely have recommendations of proven lenders they prefer to work with. I recommend a broker from a company such as RPM Mortgage instead of a big box lender (Chase, Wells Fargo, BofA) because the large lenders are so backlogged currently, they are slowing down every transaction substantially.
If you are interested in looking at foreclosures, the bank that owns the property may want you to be pre-qualified through one of their loan officers as well. They do this to â€œscrubâ€ you up front to ensure your creditworthiness. They only need a pre-qual, not a pre-approval and there is no hit on your credit for getting these â€“ they are usually easy to get by going to their website or by email. They will often put this as a requirement to submitting an offer, so if you can do it up front, you can submit an offer much faster. You do not need to use the bank asking for the pre-qual, you just need to prove to them you are creditworthy. The worst offenders are Bank of America, Wells Fargo, Chase, Prospect Mortgage and Nationstar.
Once youâ€™ve chosen your Realtor and Lender, the lender will tell you how much you qualify for, down payment and closing costs requirements and the types of loan programs available. Once youâ€™ve decided which way to go and have your financial parameters in place, your lender will communicate your parameters to your Realtor â€¦ and you are off and running.