RentToOwn-HouseFinder.com - better? Rent to own or land contract....?

better? Rent to own or land contract....?

I know I have already asked this but didn't really get the answer I was looking for. My credit is what they call "bruised" as I paid off about 40k in debt in 2000 and 2001. I know you probably think I shouldn't be getting a house if I was already that far in debt but between being a college student and prime target for cc companies and my parents dying before I went to college I needed to support myself in some way, anyway possible. See the thing is mortgage companies don't care about your sob story, they care about your credit rating. My landlord offered me the house we have lived in for 3 years for nothing down but on land contract. I am so confused on what I should do. 1 more thing to add is that I am a nanny but just stopped working for the summer and won't have a way to verify income to a lender (BA in 1 year). FI earns good money but he has no credit, besides the bills his mother turned on in his name and never pd (we took care of them but now is report has nothing on it...) TIA Thanks LA-those were my concerns with the l/c and is why I wanted to rent to own, that way if we default we aren't losing out so much. The price of the house is reasonable (reasonable for the sz) and the payments are really reasonable. As far as my stability I did note I will have my BA in a couple years and will be start teaching, fi is starting a small business (yes I know that isn't guar. pay). I don't need to consolidate because I have no debt now, it's the damage I caused 6 years ago. So then everything starts dropping off and I am back to square one? This is getting frustrating....

Public Comments

Even though you have "bruised" credit, it is still possible to consolidate all of your debts. You can contact someone who is willing to let you take over the mortgage on a previously owned house or you can even rent to own. The best possible answer to your question depends on where you would like to be in the future. You may want to start with a small loan and build your credit that way.
A land contract is like a mortgage, but it is between you and the seller. The difference between a land contract and a mortgage is that if you default, the seller takes back the property - you get nothing. With a mortgage, if the property is worth $200,000, and you owe $150,000, and the bank sells it for $160,000, you get the $10,000 over and above what the bank sold it for. With the land contract, you simply lose the property for defaulting. The decision as to whether you are interested in a land contract or not should be made considering interest rate, purchase price, and monthly payment (how many years you have to pay). If the price is reasonably close to market price, and you get a reasonable interest rate, and you get a sufficient number of years to pay it off where your monthly payment is affordable, then you can consider the land contract. However, keep in mind that if you miss payments, the former owner can simply show up and take your house, leaving you with nothing. And the more equity you build, the more likely the seller is going to want to take back the house for breach of the contract. So if you are going to do this, make sure you can consistently perform on the monthly payment.
Your question is quite long and describes quite a few things: You are not working as a nanny at present, you may have some other unverifiable income. Somebody named Fl makes good money. You have been able to pay over $40,000 debt in 2000-2001 You have been able to pay Fl's mother's bills. Your credit rating is low, and mortgage companies have turned you down for a mortgage. You are currently renting a house. Your landlord has offered to sell his house to you on a land contract (which means he has a mortgage which needs to be paid.) The first thing you should do is contact your neighborhood housing authority. Sign up and take a first time homebuyer's course. After the course, there is a good chance you will qualify for your own mortgage. List on a piece of paper, the benefits of buying the landlord's house. Compare that to a list of benefits you have right now by renting. Consider whether you are ready to pay the taxes, insurance, maintentance, and additional costs associated with owning the house. Remember, if you "buy" on a land contract, you won't have the deed or title to the property through this process. You have not said if the selling price the landlord has offered for his house is reasonable. So find that out. You don't want to be paying extra money each month so that eventually you can qualify for your own mortgage on an overpriced house. You want the benefit of an appreciated property value and equity as you make payments year after year. What is special about the place you are living now. Will you still want to be there several years from now? Look realistically at your bank account. Why is it at it's present level? How much could you save in the next three years if you continued to rent. How high could you get your bank account savings by putting more money away each month? You have plans to finish your BA. How does owning instead of renting help your plans for school? Right now, it seems it is best for you to rent and save your money. Take the homebuyer's classes. Increase the savings you have in the bank. (Cash talks! and mortgage companies listen.) Finish your BA. Get your finances in order, and re-examine purchasing a home in 2007, six months from now. The benefits you will get by paying extra money every month to your landlord for a land contract are minimal. Take that extra money and increase your bank account. Keep all your options for buying a home open. You don't need to commit to buying this house now, at the present time. You asked which is better: Right now, renting is better. I have a feeling you knew that already.