Low credit score standing in my way of owning my own home:(

Asked by Aimee, Parma, OH Mon Apr 1, 2013

We make enough, and have a down payment.. Does any one know of and banks that are willing to take a chance or a good rent to own program.?

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Terry Farnsw…, Agent, Lisle, IL
Mon Apr 1, 2013
It depends how low your score is. The other thing to consider is, if you find a lender who is willing to "take a chance" - they are most likely going to charge you a very high interest rate for the perceived risk involved on their side.

Rent to own, on the other hand, has a high potential to turn into a giant mess - and it laden with pitfalls for the buyer. There is unfortunately no easy way to purchase a home without good credit and sufficient income - although everyone is looking for one. "Rent to own" is not what it sounds like - you basically "rent to save up a sizable down payment" - then still have to qualify for the financing at a later date.

If you go the "rent to own" route" - you'll typically have to pay a large sum of money in the form of an option upfront to get things started. Plan on $3000-$5000. Next, you'll agree to a price, without knowing where the market is going to be when it's time to exercise the option to purchase. You'll still have to qualify for a loan at that time, without knowing what your credit situation will be. Additionally, you are typically responsible for all repairs and maintenance of the property throughout the lease - since you are technically buying the property when it expires. Throughout the lease, you'll get a small portion of your monthly rent credited towards your down payment.

If you pay the rent late, can't qualify for the financing when it's time to, decide the house no longer fits your needs, or decide to ultimately back out of the deal a year later due to circumstances that you couldn't have planned for - you lose everything (your initial deposit, and all credits paid over the life of the lease).

I have talked with lots of people who are somehow under the impression that "rent to own" simply means that you pay the monthly rent until you own the property - without having to qualify for anything, or use a lender. Nothing could be further from the truth.

While there is no shortage of agents who will be happy to sell you one - my advice is to focus your time, money, and energy into repairing your credit or finances, and purchase a home using traditional means.

Yes it means you'll have to wait a little longer - however it's one of the biggest financial decisions you'll ever make, and it will likely have some effect on everything you do in the future. Take your time and do it the right way.
1 vote
Lucien Solut…, Other Pro, Brunswick, OH
Thu Dec 26, 2013
Rent to own is an idiots game. Take the advice given here by others and avoid it at all costs. I would also stay away from the "we help those with low score" deals as well. They will always cost you extra! You need to think about total cost of ownership, not just how many bedrooms. Find a landlord that will allow you to pay them using Williamspaid dot com and then your rent payments get reported to the three credit services just like credit card payments do. It doesn't cost the landlord one penny. That will move your numbers up quicker than just about anything else offered here. Don't be a victim and don't miss any payments of any type for a year...pull a free report and see what's changed.
0 votes
Cecilia Sher…, Agent, Rocky River, OH
Mon Apr 1, 2013
Without knowing your specific situation or your credit history, it may be a good idea to buckle down and really focus on your credit score. This way you can get it to the point of qualifying for an FHA loan and a great interest rate. The money you could save per month on your mortgage compared to buying now and spending more could end up in your favor. You will want to talk with someone about a plan and a realistic outlook for home buying. We would be happy to help, contact us anytime.

Also, here's a complete guide to understanding and building good credit. Hope it helps! http://www.youshouldown.com/2005/12/understanding-credit.asp

Cecilia Sherrard & Andrew Ginter
Web Reference:  http://www.YouShouldOwn.com
0 votes
Ben Murphy, Agent, North Royalton, OH
Mon Apr 1, 2013
Yes Aimee, If you are still in need of a legitimate source for a loan and your credit is less than 600 this can be a very tough task.
I am a Realtor and I know someone who WILL finance you. I'm not going to try to refer you to someone who will help you repair your credit so that you can buy a home 6 months from now. I know of a program (which also happens to be ZERO downpayment) that is not "risk-based" like every other lender under the sun. This program is in place specifically for people in your situation who CAN afford the monthly mortgage regardless of credit score. You must plan to live in the property and it must be your first home. If you have been foreclosed on or owned a home in the past, you may still qualify as a first time buyer if a few years have passed.
I would love to give you the information here, but I would like to remain the "go-to-guy" for people in this situation and if I share it on a public forum, then I have no further value and no reason to be contacted by anyone in the future.
Please feel free to contact me at your convenience for the information for this program/lender. I have worked with them in the past and I have a client using them currently. I also do the bulk of my business in the Parma area so I know it very well.

Ben Murphy
Howard Hanna
440 230 6181
0 votes
Matt Helpling, Agent, Centerville, OH
Mon Apr 1, 2013
There could be some options for you. Dependent on your exact circumstances, there are some loan programs that maybe able to help. If a Mortgage is not an option at this time, contacting a realtor with experience in Land Contracts and/or lease to own options will be your best bet. Feel free to contact me MHelpling@RapidDayton.com.
0 votes
Mike Coljohn, Agent, Brecksville, OH
Mon Apr 1, 2013
Hi Aimee,

I'm a Realtor that specializes in the area and know of someone that may be able to help you. Please call me for further details. My contact info is below. Thanks!

Mike Coljohn
RE/MAX Trinity, Team Louie "B"
7570 Chippewa Rd.
Brecksville, Ohio 44141
Cell: 216.509.3027
Website: http://www.teamlouieb.com
0 votes
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