Looking at a rent to own possibility

Asked by Angela McPeak, Christiansburg, VA Thu Sep 5, 2013

We recently moved back into the area with good jobs, but my credit score is not where I would like it to be when I purchase a home. Does anyone in this area work with Rent to Own home contracts?

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Dennis Bane, Agent, Christiansburg, VA
Wed Jun 18, 2014
Rent to own have generally been replaced with Lease / Purchase contracts. The difference between the 2 is that in a lease / purchase contract, the purchaser brings money (down payment of up to 10% or more of the purchase price) to the closing, and then any amount over and above the average rent for a home goes toward future purchase amounts (generally with new financing at a bank). The purchaser is responsible for maintenance, taxes, and insurance, in addition to the house payment each month. This form is much more like the bank financing it, but with a different ratio of applied payments going toward the balance.

Rent to own has sort of went by the way side. The reasoning is that most people paid a very minimum down payment (if any) that was no different from the traditional security deposit used on rentals. The tenant had nothing to loose from tearing the unit up, with little to no ramifications. It was a one sided agreement in favor of the tenant, and property owners have become wise to it and are shying away from it. In my time in Real Estate (20 + years), I have yet to see a positive result from a rent to own.

If you are looking for a lease /. purchase, be prepared to have your credit checked (even if it is below par), a criminal background check performed, and to bring a minimum of 10% or more to the table to be able to enter this type of agreement.
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