How does rent to own work? Which would be the best way to go rent an apartment or mortgage a home if your credit is not up to standards.

Asked by dmoreno1385, Bronx, NY Sun Mar 24, 2013

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Don Tepper, Agent, Burke, VA
Sun Mar 24, 2013
Please see some of my past posts.

In brief, it consists of a lease and an option to buy a property. Typically, there's an up-front option fee that is applied to the purchase price if you purchase. The option fee is fully negotiable, but often is in the range of 1%-3% of the agreed-upon purchase price.

Up front, usually, a purchase price is agreed upon. Then you rent, often with a portion (10%-25% is often the amount) being credited to the purchase price if you decide to buy.

The option can be for any period of time. It should be for 3 years or more, to protect you. It says that you have the right (but not the obligation) to buy the property during the option period. It also generally says that you must be in compliance with all the terms of the lease.

If, during the time period of the option, you decide to buy, you notify the seller and you go out and get conventional financing to purchase the property.

You use the option period to clean up your credit and qualify to purchase the property.

Hope that helps.
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Alo webb, Landlord, New Rochelle, NY
Sun Mar 24, 2013
In my opinion over 70% of these transactions are scams. I have just seen too many of these things go bad to believe in them further. In New York, Connecticut and New Jersey I would say the scam alert is even higher.
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Anna M Brocco, Agent, Williston Park, NY
Sun Mar 24, 2013
Rent to own is similar to a car lease; Keep in mind that rent to own can be risky and one could stand to lose a bit of money, therefore do inform yourself well, and consider consulting with an attorney who specializes in real estate beforehand. If you haven't done so yet, visit with any licensed loan officer, see if you can buy outright...
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Ron Thomas, Agent, Fresno, CA
Sun Mar 24, 2013
You are desperate!
Your Credit or Finances, or both, will not allow you to go the conventional route:
You need the Seller to help you out!

The Seller will know it, and you are going to pay dearly for this service:
There aren't too many altruistic Sellers out there.

There is no FORM printed by anyone; there are just too many variables.
The terms that can be written into a Lease/Option can be dangerous to you:
How long is the Option period?
How much money are you putting in to the Option?
What happens if you are not able to execute the Option?
How do you know what your financial situation will be 2-5 years from now?
How much is the rent in the meantime?
Who will be responsible for maintenance and repair in the meantime?
What will be the Market Value of the home in 2-5 years?
What will be the Selling price 2-5 years from now?

This is the Ultimate Caveat Emptor!

Good luck and May God bless
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