Rent To Own Benefits

There are many Rent To Own benefits:

  • There are many Rent To Own Benefits, however we want to start out by saying that we typically don’t recommend people pursue Rent To Own homes.  There may be a systemic problem that led you to want to pursue a Rent To Own home that may need to be corrected first. Depending on the situation it may make sense, but in most cases we recommend renting until a person or family can get themselves in a situation to get a traditional loan for a home.  Buying a home is risky enough and putting up down payment money on a Rent To Own home with a 2 to 3 year window to get everything in order to get a traditional loan just adds to the Risk that you may lose the option fee you put down.
  • For a Rent To Own, you don’t need 10-20% to move into a new house.  A small amount of up front cash is required – typically 3.5% of the purchase price for the option fee (noted as down payment) plus first months rent. So for example on a $200,000 house you would need $7,000 for the down payment plus about $1500 (whatever is fair market rent) for the first months rent to move in.
  • You don’t need perfect credit. We understand that life happens and good people lose homes.  You may have a few bumps and bruises on your credit report and a low score, the key is not having too many collections on your report.  If you have more than $1000 of collections on your credit report, this program is not for you unless you can project to pay those collections off in a fairly quick amount of time. If you credit score is below 550 we recommend you pursue a rental and work on getting your score up higher near 600 before pursuing a Rent To Own.
  • Move in today – buy tomorrow.  You can move into a very nice home quickly, and you don’t need to wait for a lengthy bank approval.
  • Our program gives you time to repair your credit.
  • You don’t have to get your financing right away.
  • The purchase price is locked in for the entire term of the lease.
  • The option price (noted as down payment) of the home is locked for the entire term of the lease.
  • You will get the benefits of any appreciation.
  • Try out the home before buying it.
  • You don’t have to pay any property taxes until you buy the property.
  • You Do Need to have stable income, typically just as if you were renting or buying.  There are circumstances where people relocate from out of state and they don’t have a job lined up locally. However if these people have cash from the sale of a previous home, then they likely can put a 3.5% down payment plus several month paid up front for rent and also have some cash reserves in the bank. The challenge in not having income is for the tenant-buyer to use good judgement so as not to get a property that is too high in price that would be too high to qualify for a mortgage in the near future.
  • Is there risk in doing a Rent to Own? Yes. There is risk in buying a home traditionally too, you need to maintain income and pay your mortgage or you will get foreclosed on. The primary risks with a Rent to Own is not knowing what your income will be or what a lender will approve as your max purchase price.
  • So with all our clients, we do a Free 20 minute desktop underwriting with one of our partnering lenders to get a baseline and give you a projection on when you might be able to get a traditional mortgage with a lender.

Note:  If You have any collections, those will All need to be paid in full or removed prior to getting a loan.  No lender will approve a loan if a buyer has any collections.  If you only have a $1000 worth of collections then it may be manageable for you to pay those off in a few months with enough time prior to the end of your Rent To Own term.

If you have a significant amount of collections then it is likely that a Rent To Own is not for you.  It would be recommended to talk to a Bankruptcy attorney and see if that might be a better path for you to get a fresh start.  Once you have a clear projection of when obtaining a Traditional loan is feasible, then pursuing a Rent To Own would make sense at that time.