Is renting to own legit?

Asked by Lenfor, New York, NY Mon May 23, 2011

I saw ad with renting to own. Is this a good contract to get into in owning a home

Help the community by answering this question:

+ web reference
Web reference:

Answers

9
, ,
Thu Jul 19, 2012
Dear Lenfor,

The thing to remember With Rent To Own is you'll be locked in both to the house and to the price, even if it takes you 3 years (or more?) to save enough for the down payment through the forced savings of the rent payments. 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.

Find a way to save up on your own; not with Rent To Own.

Sit down with a local Mortgage Banker and get yourself prequalified, too. You may find you're better qualified than you think you are, and, if you're not, at least you'll know how much loan your income and credit qualify you for, and how much you have to save towards down payment and closing costs.

If you do go with a Rent to Own option, be sure your attorney explains the contract to you THOROUGHLY, and assume it is usually going to be a better deal for the seller than it is for the renter/potential buyer.

Good Luck,

Trevor Curran
NMLS #40140
0 votes
The Property…, , Brooklyn, NY
Mon May 23, 2011
Rent-to-own is definitely legit and can be a means for both parties to benefit. The key is to draft the agreement so both parties agree on the terms and no side feels taken advantage of. I recently drafted terms where the buyer would rent the property for a period of twelve months and each month a portion of their rental payment would be considered a credit at closing from the agreed upon purchase price. Buyer had to make a down payment and I am working with them to be mortgage ready in the next 10 months. The Seller was able to leave the country and I now manage the property in their absence. There are very specific terms in the agreement that made this deal sweet for both parties and now I have people calling me like crazy for a similar deal. The short is - a contract can say whatever you want it to say, so long as the parties agree; therefore legitimacy really isn't an issue.

Monique Antoine
The Property Matchmaker
(718) 233-3868
0 votes
BG, Home Buyer, Phoenix, AZ
Mon May 23, 2011
ps: what motivate a seller to go rent to own route ? - save that 6% commission and a few months of vacancy in a stale housing market.
0 votes
Annette Levi…, , New York, NY
Mon May 23, 2011
It is legit but you must make sure it is not a scam. You would need to put down a down payment. Only the rent over the going rate in the area is allowed for a downpayment. We would not credit you 100% of the rent. You must fix a purchase price. For that I would suggest an appraisal. The seller should not give you the name of an appraiser.
Do have 3.5% to put down? If so a FHA would be better for you then a rent to purchase option.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon May 23, 2011
Yes renting to own is a way of purchasing a home, however if considering such a route, do inform yourself well beforehand; if things don't go as planned, you could lose a bit of money; therefore consult with an attorney who specializes in real estate and do research online as well.
0 votes
Mitchell Fel…, Agent, Brooklyn, NY
Mon May 23, 2011
Dear Lenfor:

With a rent to own type of deal, basically the rent that you pay or a portion of it should be applied to your down payment when you purchase the home at a later date. This helps a buyer who may not have the savings for a down payment in the first place. You would still have to secure financing and also have funds for the closing costs associated with the purchase, The closing costs will usually be about 6% of the loan amount. You should also speak to a mortgage banker to see if you are qualified for the loan and if not what you need to do in order to qualify at a later date.

If you cannot qualify for the loan you may be better off just renting as with rent to own situations you typically would pay a slightly higher than normal rental amount. If I can be of further assistance please let me know. Good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes
Jack Menashe, Agent, Brooklyn, NY
Mon May 23, 2011
May cost you little extra than a conventional loan - just make sure your lawyer guides you properly & reviews any documents.

Regards,

Jack Menashe
917.797.0215
http://www.SHERestates.com
0 votes
Kelvi Cunnin…, Agent, Manhattan, KS
Mon May 23, 2011
In some situations rent to own is a good and valid option and yes, it is legal. However, do make sure that you have a legal contract for this agreement either through a lawyer or with the help of a real estate professional. As the first answer mentioned, this is usually not the least expensive option, so speak to a local lender about other financing options before you agree to a rent to own scenario. It could save you money in the long run and even potentially open up other purchase options for you too. Good luck!

Kelvi Cunningham
0 votes
BG, Home Buyer, Phoenix, AZ
Mon May 23, 2011
it is a legit way of obtaining homeownership but it is not the least expensive way.
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more