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 firstname.lastname@example.org or by visiting his web site www.utahrealestatestore.com www.SearchUtahFineHomes.com