Avoiding Rent To Own Disasters
Avoiding Rent To Own Disasters
Rent To Own homes are a great financing alternative for those that cannot qualify for standard financing or need more time to save for a down payment. It can also be an answer for people that are not quite ready to buy for their own reasons but are confident that they will be ready before their Option Period expires. When purchasing a Rent To Own home, two agreements are needed to complete the concept.
• The Lease or Rental Agreement
• The Option To Purchase
Separate The Lease From The Option To Purchase
To protect yourself, always require two separate agreements rather than one. Although it is not a common practice, some unscrupulous sellers have been known to find a reason in the lease agreement to cancel the whole transaction. If you have two separate agreements one will not affect the other. Separate agreements will discourage a landlord/seller from attempting to gain your option fee by taking advantage of a lease misunderstanding.
Avoid Major Modifications Until You Have Purchased The Home
Although this situation is mentioned earlier it bears repeating. The majority of standard lease agreements state that major modifications or those that are physically attached to the premises become the property of the lessor. Even if this is not the case it would be impossible to take basement-remodeling job with you when you move. Try to make due until you own the property.
Actively Monitor and Improve Your Credit
One of the most common problems arises when the buyer waits until the end of the lease period to verify that they can qualify for a home loan. Don’t let this happen to you. Before you begin looking for a home you should select a reputable credit repair firm that can advise you on the length of time it will take to improve your credit to the point that you will be able to purchase a home. You also may need to speak with a lender to determine their qualifications.
The time period you will need to improve you credit should coincide with the length of your lease. In other words if it will take two years to clean up your credit report make sure that you have at least a two year lease.
Choose A Lease Payment That Is Affordable
Buying the home of your dreams can be a wonderful experience. Just make sure you aren’t dreaming about your ability to afford the home. A lender is not going to dictate the amount of your payment in this situation. You have to determine the answer. Take some time to design a comfortable budget before you begin looking and stick to it. Unaffordable lease payments can mean late payments and late payments defeat the whole process of credit repair.
In addition to the common problems associated with Rent To Own agreements you also want to avoid those that are not so common. Professional help can often save you time and money when dealing real estate. Many people avoid hiring a realtor or an attorney during this process thinking that they will save money. The next section deals with hiring the right professional the right way.
Don’t Go It Alone
Purchasing a home may be the largest investment that you ever make. A home purchase involving financing can involve a number of specialized professionals including:
• A Realtor
• An Attorney
• A Title Company
• A Lender
• An Appraiser
• A Home InspectorPurchasing a home on a rent to own or lease purchase basis can be even more complicated than a standard purchase. Enlisting a real estate professional to assist you with a Rent To Own home lease and purchase should be number one on your list. There are a number of places to save money when purchasing your home. Doing without a realtor is not one of them. Selecting your realtor and negotiating how they are paid is the key to this process.
Hire Experience
If you are expecting to pick a realtor out of the phone book or use just anyone for your realtor on a Rent To Own home purchase – think again. Seek out a realtor in your area that deals with Rent To Own and Lease Purchase homes on a regular basis.A local realtor that works with Rent To Own and Lease Purchase homes should also have a good idea of who is a legitimate seller in this area and who to avoid. Experience is worth hiring especially if it costs you little or nothing!
Let Your Seller Pay The Realtor
Did you know that you could negotiate your realtor’s fee in a way that will cost you a fraction of the standard fee? Most realtors that work with Rent To Own homes on a regular basis know this and will charge accordingly. Ask your realtor if they will work for you for a percentage of the Option Fee. Because the Option Fee is non-refundable it will add no-out-of-pocket expense to your purchase. If there are realtor’s fees they will most likely be paid by the seller.
Showing HomesMany homeowners are reluctant to show homes to unknown and unscreened candidates. If the home is vacant they prefer to have a realtor make an appointment and show it rather than interrupt their schedule with home showings. Realtors can easily access these homes with lockboxes at just about any time.
Access To More Homes
Most homes for sale in your area are listed by realtors. The same is true for Rent To Own homes. Realtors have information that can save you time and money when searching for a home. Give them your requirements and let them find your home for you.
Access To Other Professionals
Realtors that deal with Rent To Own homes on a regular basis have built relationships with lenders, appraisers, title companies, real estate attorneys, and other professionals that you will need to utilize in your home purchase process. This is a much better process than thumbing through your phone book and hoping that you pick someone that will treat you fairly.
To Rent To Own – Or Just Own Now?
If your reason for looking at Rent To Own homes is a credit issue have your realtor give you an opinion as to whether your particular credit situation would bar you from purchasing a home. Chances are that they know a lender that will review your credit for no charge and let them know. You may be surprised to learn that there are several loan programs available that are not qualified by credit scoring. You may be able to buy now if you wish. Find out BEFORE you Rent To Own.
Have Your Agreement Reviewed
If you do decide to use the Rent To Own concept to purchase you next home and you do not use a realtor at the very least have an attorney review your Rent To Own or Lease Purchase agreement. Don’t just sign the landlord/seller’s agreement and hope for the best. It’s not always what is in the contract that makes the difference. Sometimes it is what isn’t in it.