#rent to own properties
How safe is rent to own properties??
Asked by cyndi90210. Arlington, TX Wed May 29, 2013
Trevor Curran. Mortgage Broker Or Lender, Great Neck, NY
Good morning cyndi90210,
Rent To Own is a better deal for the Seller than it would ever be for a potential Buyer.
The basic concept is finding a way to force savings towards a down payment by including a portion of the monthly rental that goes towards that savings. You pay your rent every month and your Landlord deducts a pre-determined amount to hold in a special bank account, called an escrow account. Your Landlord holds that money until you have saved up enough—through this forced-savings method—to meet a down payment to purchase the home.
The terms of the purchase price, including the down payment amount, and the amount to be set aside from the rental for down payment, are all set down at the time of lease signing.
It s all about helping the renter/tenant save up enough money for a down payment to buy a home (in this case, the one you re renting). But this is a better deal for the Seller because he gets to lock in a purchase price and a buyer today for a future sale.
Saving money for a down payment? Well, heck, you can do that on your own.
If you are dedicated to the idea of buying your own home, you can create your own savings plan to save up enough money for a down payment. And when you have saved up enough for a down payment, if that takes a year or two or more, YOU get to decide on the price you re willing to pay for the house at that time based on current market conditions. You won t be locked in to a price that may be a lot higher than what the house is worth in the future.
With Rent To Own you ll be locked in both to the house and to the price, even if it takes you 3 years to save enough through the forced savings of the rent payments. What happens if three years from now your life situation has changed? Maybe you need a bigger/smaller home. Maybe your employment has relocated. Maybe your credit or income is insufficient to qualify for a mortgage loan.
Find a way to save up on your own; not with Rent To Own.
Sit down with a local Mortgage Banker and get yourself prequalified, too. You may find you re better qualified than you think you are, and, if you re not, at least you ll know how much loan your income and credit qualify you for, and how much you have to save towards down payment and closing costs.
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