I'm looking to buy my first home. I have a credit score in the low 500's and I was looking for a rent to own option . Where should I start ?

Asked by Amber Walker, Beaumont, TX Fri Aug 16, 2013

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Randy smith, Agent, Beaumont, TX
Mon Aug 19, 2013
give me a call 409 293-1393 I can help you .
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Brenda A. Mo…, Agent, Las Vegas, NV
Sat Aug 17, 2013
You should start by looking at your credit and what is causing the low score. All three credit bureaus have the ability to join their credit monitoring and you can dispute items in your file. Also work on keeping credit card balances at below 50% of their limits. This will help improve your score. Once your score improves a good realtor can help you find a lease option. The seller pays the cost for the realtor so you have nothing to lose. If you have any other questions you can email me at bamorra@yahoo.com.
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Terry Farnsw…, Agent, Lisle, IL
Fri Aug 16, 2013
Rent to own doesn't get you out of having to eventually qualify for a loan - it just puts it off by however long the lease stipulates. Once the lease is up and it's time to exercise the option, you better be able to qualify for the loan or you lose everything you've "banked" over the lease term.

Rent to own agreements are really just a way to "force" a down payment savings. Oh, you also have to put up a large sum of money down upfront, and some agreements also make the upkeep/repair responsibility yours during the lease. This means if the furnace goes out, or anything else goes wrong - you have to fix it.

Do yourself a favor and rent somewhere until you can get your credit score up. Lease options have a high potential of turning into a gigantic mess because things change in life - and often the buyer doesn't want, or can't ultimately qualify for the loan when it's time to actually buy the property. Additionally, the property might not be a good deal, or appraise for the purchase price 2-3 years from now. Too much money, too much uncertainty, and too much risk.
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Mack McCoy, Agent, Seattle, WA
Fri Aug 16, 2013
You can start by rehabbing your credit, and putting aside that foolish notion of rent-to-own.

Think of it this way. There are very few RTOs on the market, you'll be paying big time for the option whether you exercise it or not, and when you DO get your credit rehabbed, you'll be kicking yourself for having committed to the RTO place when the entire marketplace of available homes is now open to you!

So. fix your credit, save your money, have patience.

All the best,
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Earlene Hanc…, Agent, Highland Heights, OH
Fri Aug 16, 2013

If I can continue to offer suggestions to you, dear, let me know.

God bless,

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Susan Meagher, Agent, Beaumont, TX
Fri Aug 16, 2013
I live and work in Beaumont! Please give my office a call at 409-554-1834 and either I or my assistant Anthony will go over your options.


Sue Meagher
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Earlene Hanc…, Agent, Highland Heights, OH
Fri Aug 16, 2013
Hi Amber, We're in different markets ~ I'm in Ohio, but I wanted to respond to your question. In order to purchase a home, your credit score needs to be 680 ~ there are some lenders who will accept a minimum score of 620. First thing to do is contact an agent in your area, explain that you're looking for a lease with option to buy. A good agent will refer you to at least 3 reputable mortgage lenders (you'll pick which one you'd like to work with) to check your credit and make recommendations as to what you need to do to become credit-worthy. Some are simple fixes, others more complicated and in some cases, there may be erroneous information on your credit report. Lenders pull a tri-merge...not the same as the report you, as a consumer, can obtain.

Be aware that everytime you pull your own credit or a company (credit card, department store, etc.) ~ it lowers your score! Many prospective buyers are not aware of this - so only allow a mortgage lender to do so.

There are a number of companies out there who will charge you a fee to "fix your credit". Personally, I don't believe that's necessary ~ a mortgage lender can advise you at no cost. Also, it's much easier, I think, to work with a local lender rather than one you might find on the internet.

Give the real estate agent your list of "must haves" and the areas you're intersted in, much like you'd do when you're searching for a home to buy. Not all residential rentals are open to a "lease option", so be sure the homes you view will accept that arrangement. The terms of lease options vary...in some case, the owner will require 2 months' security deposit, plus the first month's rent. Others* will want you to deposit a "non-refundable" option fee ~ here in Ohio, it can be 3% of the projected sales price of the home.

There is an option period written into the lease...the time where you must exercise your option to go forward and purchase the home....usually between 1 to 3 years. That is worked out between you and the owner. It is strongly recommended that you have a real estate attorney review any lease option BEFORE you sign it, so that you're clear on what your...and the owner's responsibilities are. Always, always read the fine print.

*You should be aware also that there are large investment companies buying up distressed properties all over the country and turning them into rentals or rent-to-buy. They have their attorneys...you should also have your own attorney to look out for your interests.

Hope this has been helpful. Good luck to you.

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