The Rent to Own Option
The dream of owning a home can be kept at bay when credit problems pepper your past. That's where a concept called ‘rent to own' can help. But is it the right choice for you?
Rent to own is also known as ‘the lease option', and it gives would-be homeowners an affordable alternative to a conventional sale.
THE LEASE OPTION
The process works like this: A homeowner rents out a property and gives the renter the option to buy at the end of the lease.
A fixed percent of the rent is then credited toward a down payment. "It allows you to buy time to work on your credit," says Ron Fenceroy of Rent to Own Realty.
Am I a good candidate?
Rent to own may make sense for people in a variety of situations. It may be a good choice if you:
Have bad credit
Don't have enough for a down payment
Have trouble saving
Homeowners: You might consider this option if you're having trouble selling your home.
Other candidates
It can also be ideal for people going through tough personal times, including:
Divorce
Health problems
Rocky work history
DRAWBACKS
There are downsides, though.
For Buyers:
You have to wait to claim the tax write off for the home until you actually buy it.
If you decide not to buy after all, you lose any credits, or money, put toward the house.
Homeowners:
You'll have to wait until the home closes to see the profits
How can I get this option?
You can look online for a realtor who specializes in rent to own properties, or ask a potential seller yourself. Your best bet will be with a house that's been on the market for more than six months.
BRIGHT IDEAS...
Get Credit… good credit that is
Your credit score could make or break your plans for ownership. It will influence your mortgage rate. Before shopping for your new abode, polish up a lackluster score. Click here for tips.
Pre-approval: Get pre-approved for a home loan. Sellers know that pre-approved buyers are serious, qualified and ready to close quickly. It also gives you an idea of how much home you can afford. Need help calculating what you can afford? Click here.
