Nontraditional home financing...reality or a dream??

Asked by Zee Moore, Charlotte, NC Sat Oct 19, 2013

Hi...my husband and I want to buy a home in the Charlotte / fort Mill area. Our credit sucks...primarily because of divorce. We make a almost 200k a
year combined and have been on our jobs a while. We have been working with an agency to help "repair our credit" but it, as expected, is a slow process. Is there anything we can do such as owner financing, lease to own, etc .

I haven't found many properties,
either lease to own or owner financing, that are large enough for our family of 5. We need a 4 beds minimally and great schools. Any thoughts?? Dream or is there a way??

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11
Jessica Bate…, Agent, Beverly Hills, CA
Mon Oct 21, 2013
Depends on how bad your credit is.. FHA requires a 580 credit score, and 620 credit score for a conventional loan.. But you have to find the right lender, I would suggest going to The Lenders Network they are a referral company that can get you in contact with the right lender.
1 vote
Daniel Fisher, Agent, Charlotte, NC
Mon Oct 21, 2013
Good morning, Relocating.
If you go the rent to own route, you may want to read the Trulia Real Estate Blog "What are ways to make sure I don't get scammed in a rent to own home?" Generally it is better to avoid signaling to a Seller that you are a desperate Buyer, but instead be patient and get your credit where it needs to be. With a higher credit score, you can take advantage of the best market opportunity you can.

You should talk to a HUD certified housing counselor http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm to make sure you are doing what it takes to get yourself in a position to purchase. If you are not having success with your current agency, maybe it is time to find another. We have resources that will help you know what to do to prepare yourself to get a loan and a home. If you have a full time agent with a Masters degree in Planning with Finance and over two decades of experience, working for you, you will likely do better in negotiations. I'd be pleased to provide that service. If you appreciate this answer, please give it a thumbs up, or if this was the most helpful answer, please say thanks with a best answer click.
0 votes
Andy Matejka, Mortgage Broker Or Lender, Greensboro, NC
Mon Oct 21, 2013
Credit restoration shouldn't be too slow a process as long as you have at least 2 or 3 open accounts actively reporting your timely payments and well managed balances to all 3 Credit Bureaus.

You have great income at your disposal which is a huge advantage when it comes to satisfying any delinquent or derogatory accounts if they exist and there are many reputable agencies that work in this field.

Your options are so much better in the longer run outside of Owner Financing and Lease to Own, but sometimes you never know.
0 votes
Savvy Homes, Agent, charlotte, NC
Sat Oct 19, 2013
It is going to be tough. And if you wait till after the first of the year it will be even more difficult to get traditional financing. If you have a good income, saving up a substantial down payment should be high on your priority list. You also need to get to work on your credit scores. Credit repair companies usually are not going to help you as much as you can help yourself. Pay off your high credit cards and get that debt to income down to next to nothing. Use your credit cards every month and pay them off every month. Don't buy anything that you don't need... just gas, groceries... and that's it. Take all the rest of your money and pay off your debt. Any thing left, put in a savings account.

You also have to look at the reality. If you have bad credit, why would someone want to do owner financing. You will only be looking at homes that the owner owns out right and for some reason can't sell. These are usually fixer uppers. They may be dated, with blue carpet and old cabinets. If you are willing to accept that - and not be picky, then your agent should be able to find a home that has been on the market a while. You can offer the seller, full price, a higher than normal interest rate and that big down payment you have saved up. If you are lucky they will give you 3 to 5 years to refinance. In that time you should be able to make improvements to the property and improve your credit enough to refinance to a traditional loan.

So... if you are determined, and willing to do the hard work and settle for something no one else has wanted... you probably can find a home to buy.
0 votes
dave, Agent, Charlotte, NC
Sat Oct 19, 2013
I do not think it is a myth but could be a reality. First, I will recommend staying away form rent to own and lease options. They are definitely not worth it and in the long run you end up paying significantly more than you should. I have had a few clients go that route and lose a tremendous amount of money.

In terms of your credit. By your definition and a credit agency it sucks. First, you should not be paying someone to fix your credit. I work with two lenders who will walk you through the process to get your score up without a fee. All they ask for in return is the opportunity to finance you for your mortgage when they get your score to where it needs to be....

Second, I have lenders that will do FHA as low as 600 with 3.5% down and may be able to go as low as a 580 and get you approved. I have had people get approved with scores in the low 500's with a decent down payment (usually 20%) and some reserves in the bank. So I believe there are options available to you out there to help you get the financing you need.

I recommend you give Chris Ayer a call at 704-771-3954. You can reach him seven days a week. If he does not answer leave him a message and he will call you back. He will pull your credit and offer you advice on how to get the score up or if you can buy now with your scores.....

Dave diCecco
Realtor/Broker
Helen Adams Realty
Cell: 704519-7895
ddicecco@helenadamsrealty.com
http://www.davedicecco.com
0 votes
Eric Cox, Agent, Charlotte, NC
Sat Oct 19, 2013
There's definitely a way. You're not alone in the world of damaged credit during this economy, and there are options available to you.

I have few options available for financing if you have at least a 600 credit score and 20% down.

Another way is for you to create a loan through a family member or friend. You could create a short term 3-5 year loan and then refinance once your credit score improves. There are sites out there designed specifically for that, like http://www.nationalfamilymortgage.com. They can become a true "lender" and collateralize their money with your home.

Your last case scenario should be the owner-finacing or rent-to-own route. These options are available but will significantly limit the number of prospective homes available to you. Also, this method will hurt you the most in terms of negotiating with any seller. You'll need to have a good Realtor who knows how to search for homes with this less-trusted method of purchasing in your price range.

I'd love to help you out in any way I can. Call, text or email me anytime.

Eric Cox, Principal
Cox Residential
Call/Text 704-340-8510
Eric@CoxResidential.com
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Sat Oct 19, 2013
For the most part it's a dream. Rent to own is more urban myth than reality and there's only two reasons why an owner even suggests this: the first is because they can't give their property away and are desperate and have no or little mortgage. The second is because they never intend for the tenant to actually buy the unit and the "lease" agreement is so weighted in their favor that the likelihood of a tenant actually buying is very slight. I strongly advise potential buyers against rent to own as in 35 years I've never once seen a tenant end up buying the property, but have seen everyone who has foolishly entered into this type of arrangement pay over market rates for their rental.

Because of your earning you might find a hard money lender who would consider financing you with a mortgage, however you're going to have to pay over market rates, and these could be anywhere between 5-7% for a 30 year fixed rte mortgage or even higher. Remember, you've got no leverage and the lender is assuming more risk.

Regardless of what you do, be aware, the people you're going to talk to generally speaking are looking out for themselves not you and you'd be wise to have an attorney carefully review any documents before you sign them
0 votes
Amy Baker, Agent, Charlotte, NC
Sat Oct 19, 2013
Hello,

I often talk to many buyers in your position. The first question is where does your credit actually stand? Some buyers feel that their credit is not good enough to qualify to purhase but then when we do more research, they do actually qualify.

If truly our credit is not to a point where you can qualify for traditional financing, then a lease purchase or owner financing could be an option.

Both have their challenges.

With a lease purchase you are limited only to homes where the owner can/will consider this type of option. If under traditional circumstances, you would have 20-30 homes to choose from, under a lease purhase search criteria, you might narrow that down to only one or maybe two options. I am a very strong believer in the fact that a house is a big decision and commitment. I hate to see my buyers have to settle for a house just because it is the only one willing to lease purhase. My typical advice is to keep renting and buying separate because thy have such differnt goals. If you can't buy the right home, then lease something that fits your budget while you correct credit and save up.

For owner financing, you would also be limited because the only owners who can offer this option are those that have their homes paid off. As you know, it is more and more rare for seller to own a home outright with no mortgage in place. On top of that, they have to be willing to take a financing risk on a buyer who does not qualify for traditional financing. Usually this will mean that they will require a large non-refundable down payment and a high interest rate.

My best advice to you is to develop a relationship with a Charlotte area realtor and mortgage broker. Together they can analyze your specific situation and better advise you.

If you would like to take more, don't hesitate to call or me email. I'd love to be part of the team that helps you achieve your real estate goals.

Amy Baker
Allen Tate Realtors
704-258-1459
Amy.Baker@allentate.com
0 votes
Jackie Young, Agent, Mooresville, NC
Sat Oct 19, 2013
Send me an email at jackieyoung@kw.com. I can help you out.

Thanks,
Jackie Young
Keller Williams Realty
704-575-9202
0 votes
Annette Law…, Agent, Palm Harbor, FL
Sat Oct 19, 2013
R2S in Charlotte,
You are the perfect candidate for "First Look" options.
Such an option allows you access to real estate opportunties BEFORE the public is notified.
Agents offering "Firts Look" options are proactive in identifying options most benefical to home owners. Understanding these optioins allows the agent to find the right fit in regards to a buyer. Often, the buyer, such as yourself, will come through another "First Look' agent.
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You must identify a mulit-dimensional real estate professional you knows how to present the various forms of seller financing that will make obvious to the seller this is a viable and profitable option. This is one of thse rare curcumstances where a non-traditional lease/option can prove to be a win/win. Be aware, a traditional lease/option is predatory towards the buyer. Traditional lease/option should not be a choice to consider.
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Find the right agent and commit to them. This will give them the assurance that the situation they create wil not fall flat because the buyer bolts. You will need to be flexiable in your housing requirments, don't chase vapors on aggregate real estate websites. and understand, such opportunities are created and are rarely found via MLS or other source listings.
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It is important to note, you are not the only buyer in your situation. Most are emerging from credit wrecking situtions such as job loss, divorces illness, short sales and foreclosures. Because their are so many seeking to circumvent the credit issue, it becomes imperative that you are able to demonstrate that you are serious and are on a solid path to success.
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Now, you will need to have cash readily available.
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If you are serious, you will pick up the phone and start CALLING Chalotte real estate professionals. Those who can not solve your problem will reveal themseves by what the don't saty. Those who are multi-dimensional will restate what you have read, identify how they will sercure the property and advise you regarding the costs you will be required to pay..immediately. Yes, YOU will be required to pay the professional fees of your agent, before you move in! This is the secret ingredient that you can recognize that makes the whole process work.
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It is not a dream. It will require work, patience and trust. Plus you MUST do whatever you agreed to do. One failure and you will be out the door. (translated this means to go to LOW PRIORITY status because you've demonstrated you overcommit.)

Best of Success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Sat Oct 19, 2013
Rent to own is more dream or myth than real. They don't work and just screw the renters more so sellers avoid them.

Good luck to you
0 votes
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