How Rent to Own Works For a Buyer (Part 1)

 Rent-to-Own or Lease with purchase (lease  option)  can be a great way to become an homeowner. If you are currently renting you might as well have your rent work for you towards buying a home.

How do you know if a rent-to-own or lease option is right for you? I believe there  are three  factors that you  should  take into consideration when deciding if a lease option is right for you.

1. The first one is obvious…do you want to buy and own a home? You must decide that  owning a home is what you want.  Becoming an homeowner  brings responsibilities, like up keep on the property…yard work,  general repairs and slightly higher utilities.

2. Your credit  may be  preventing you  from obtaining a  loan to purchase the property of your dreams. Time may be all you need to aquire  a mortgage  like 6 to 18 months.  This can give you time  to  build  your credit, repair your credit or you  may be coming out of a Bankruptcy.    

3. Being a buyers market, tying up the property with a lease to purchase can be a smart move. Capturing a home at today’s prices and finish the purchase with a mortgage at  the end of the lease terms.

If one  or all of these conditions fit your criteria,  then rent to own may just be the way to go. If you are moving  foward with a lease to own you need to have a plan and goals put into place.

If you can qualify for a traditional  loan then  lease to own might not be the best thing to  do. The reason I say this is,  if you can purchase the property with a mortgage  then do so because you will benefit  with the purchase.  A mortgage  payment will  probably be  lower than the  rent, and you will  be able to  use the interest from the mortgage payment to help you reduce your taxes. And the best part…you will be official  on the deed.    

Talking with a lender would be a good move. Their professional opinion can help you structure your plan. A lender can give you insights on what you will  need in order to  qualify for the loan  when it  come time to finalize the purchase on the property.  

You may need  to  bring your credit score  up just a few more points, a year time may be all you need.  Most self employed people don’t show enough income to  qualify and need to fine tune their tax returns so they can  show sufficient income for two years to qualify for a mortgage.

Most lenders  require a two year period after a Bankrupcty before they will lend to the borrower. What ever the case may be, my point is to make sure you will be able to  qualify for a loan after the lease period is up.  

Knowing how long it may take  canhelp you  build your plan.  Nothing is more disappointing and frustrating for the  buyer and seller when the buyer is unable to succeed with the purchase at the end of the lease term.

In the next article I want to share the actual structure of the lease to own. The basics of the purchase contract, lease terms and methods that should be put into place, not only to protect the buyer, but also to  protect the seller.

Todd  Rodocker  specializes with first time home buyers, seasoned buyers and investors.  He can be contacted at toddrodocker@kw.com or by visiting his web site  www.utahrealestatestore.com  www.SearchUtahFineHomes.com  

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About toddrodocker

I have been doing real estate for over 15 years has a Real Estate Investor, Real Estate Agent and Mortgage Originator. Todd Rodocker Realty Group is partner with Aubrey & Associates Realty and Altius Mortgage. NMLS 317650
This entry was posted in For Buyers, General Information. Bookmark the permalink.

One Response to How Rent to Own Works For a Buyer (Part 1)

  1. Teri says:

    I would be interested in seeing your list.
    thank you

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