If you are looking for homes for rent to own, chances are you are not in a situation currently that allows you to qualify for traditional financing. Perhaps you are self employed and unable to provide the underwriters with two years tax returns that verifies your income. Even more likely is that your credit score is not strong enough to get a mortgage now that the guidelines have tightened up so much.
Whatever your reasoning, getting a rent to own home can be a great step towards a positive future. But, there are some things you should consider as you go through the process.
First – make sure you are really motivated. Statistics show that most tenant buyers who enter into rent to own contracts never actually end up purchasing the home. Most often, the reason is that they were not serious enough and therefore did not take action to immediately begin fixing their financial situation.
Let’s face it – credit repair isn’t a fun process. Very often, you need cash to pay off old collections and pay down credit card debt. This takes disciple and hard work and, unfortunately, most of us are more interested in pleasure today. If you doubt your resolve to correct your financial situation, then you should probably consider renting until a time in which you feel more motivation. It simply doesn’t make sense to pay an upfront option fee of between 2% and 5% of the home’s value if it is not going to help you in achieving your goals.
You also need to make sure that the current home owner is really serious about selling you the home and not just more interested in having a renter who is willing to pay them an upfront fee.
While most home owners do want to eventually sell, there are some who advertise their homes for rent to own simply because they like collecting option fees. They then structure the contract in a manner that does not give you the opportunity to purchase the home. Typically, this involves a very short term (less than two years) so that you do not have the opportunity to repair your credit. Alternatively, they may set the purchase price so high that you are not able to get a loan because the appraisal will not be accepted by the bank.
By making sure that everyone has the same goals, a rent to own contract can create a win-win for both the tenant buyer and the home seller.