Home Buying in Philadelphia>Question Details

Dottie, Home Buyer in West Parkside, Phila...

what's the deal , with the rent to buy programs and are there any in Phila, Pa?

Asked by Dottie, West Parkside, Philadelphia, PA Mon Aug 23, 2010

looking for a credible rent to buy program in Phila, since a friend recommended I look into this i dont see them advertised . Are they a scam ? since my credit is low I thought this may be a great way to get into a home.

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There are no rent to buy "programs". It is the owner who would decide if they wish to do this for you. All you need to do is ask. Get an offer in writing and go from there. Most owners do not advertise that they would be willing to do this.
1 vote Thank Flag Link Mon Aug 23, 2010
In Pennsylvania we refer to these transactions as a lease-purchase. This is an arrangement that involves a lease and an agreement of sale that refer to one another. Here is how it would work:

1) You look at homes on the market with special focus on homes that are also for rent and homes that are vacant (owners of vacant homes may be more motivated).
2) You propose a lease-purchase.
3) You write a lease that allows you to rent the property for a period of time. Two years might be enough time to improve your credit enough to qualify for a mortgage. The terms of the lease normally include additional rent above what the current market will bear. If a similar house would rent for $1,000/month you would agree to pay $1200/month for example. The additional $/month would be applied to your downpayment by the owner at time of settlement.
4) During the term of the lease you work hard to improve your credit. As another agent mentioned here, many times the buyer/tenant does not sufficiently improve credit. Try to think about why your credit is not what it could be now and decide if you can afford to address these issues while renting the house you want to buy.
5) A few months before the lease is over you work on obtaining your mortgage. Hopefully you will have been in touch with your lender since before signing the lease and so it will be a simple matter of running your credit again and getting you up to date with the current mortgage programs that might work for you.
6) If you are unable to buy the house, or if you have changed your mind you can simply walk away at the end of the lease (unless there is something stating otherwise in the lease). However, you will not be able to collect the additional rent you paid. This additional rent is the owner's only consolation in the case that you do not move forward with the purchase side of your agreement.

The beauty of the lease-purchase is that it could allow you to take advantage of low home prices. One down side is that home prices could slide further down, causing you not to want to purchase the house. More importantly, however, the interest rate could go up which would mean that the home is no longer affordable for you. For this reason, I do recommend that if you rent-to-own you choose a home that would still be affordable to you at a higher interest rate.

Good luck! I hope you are able to realize your dream of homeownership! It's a complicated process, so be sure to contact a good agent.
0 votes Thank Flag Link Mon Oct 11, 2010
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0 votes Thank Flag Link Mon Oct 11, 2010
We've done a lot of rent to own deals in Philadelphia. They are not super popular because many times the renter never actually buys at the end of the lease.We have found that it is because the tenant's credit was never worked on during the lease period and they could not qualify for a loan when it was time to purchase. That scenario is common to see. The other situation we have observed is that the renter is not fully committed to the purchase and they move on to yet another rental after their rental is expired and it is time to buy. The rental contract in our lease purchase agreements supersedes the agreement of sale. if the lease is broken then the sales contract become void.

Here are a few blogs we wrote about the process. We hope you can gain some insight into the process.

0 votes Thank Flag Link Tue Aug 24, 2010
Good Morning Dottie,

We have a program for rent to own. There are qualifying factors in order to obtain a RTO property.
You can click my profile to contact me.
0 votes Thank Flag Link Tue Aug 24, 2010
It does work on homes that are either for Rent or For Sale on the market ( especially vacant homes that were on the market for a long time )

Let me know the area and price range you are looking to be in and I will put together a list of places that may entertain a Lease Purchase for you.

Thanks Again,
Jason Lepore
Selling in NJ & PA

Cell 215-688-1446
Web Reference: http://www.LeporeTeam.com
0 votes Thank Flag Link Mon Aug 23, 2010
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