RentToOwn-HouseFinder.com
Has anyone bought a house with the Rent to Own option?
I'm newly divorced and trying to get back on my feet financially. I've had credit problems in the past, and have been paying $2500 a month in rent for the past 2 years, and it kills me that i'm not building any equity. I recently heard about Rent/Lease to Own options to buy a house. I would be interested in hearing from anyone that's done this and what your experience has been. Thanks!
Public Comments
- I have not done the rent to own but, I live in FL where it is all over the place. I have heard of the owners wanting a pretty good size lump sum up front, like $10,000 cash and they want you to pay off the property in a short amount of time, something like 10-15 yrs. It's a great thing for someone who doesn't have the credit to get a loan to buy a home though there is a big BUT involved. Be careful with who you deal with. It's very easy to get ripped off. I would definitely make sure you read the small print and get to know the person you will be dealing with and have the papers drawn up by an attorney. Hope this helps you. Good Luck!
- Rent to own situations are usually set up like this... You pay a higher monthly rent than you would normally pay for a home with the excess amount going towards a down payment at the end of the agreed upon time. At the end of the agreed upon time you arrange for your own financing and purchase the home with this down payment. Problems occur with poorly written agreements and the excess money not being paced in an appropriate trust account for the benefit of the reanter/buyer. Problems also arise if the market drops or increases during the rental time - someone isn't happy and wants out! For example: You agree on a purchase price of $100,000 and a 2 year rent to own term paying $1000 rent with $200 going into the "down payment bank". After 2 years you have $4800 in the down payment bank along with some savings - enough to buy with 5% down. During the 2 years you have established and or improved your credit. BUT... now the market price isn't $100,000 but dropped to $80,000! The bank won't lend you enough! You dont want to buy it now because it isn't worth what you contracted to buy it for - you want out! What happens to your $4800? OR...now he market price isn't $100,000 but $120,000! the Seller does not want to sell it to you now for $20,000 less! They want out! These are all scenarios that should make you leary of this type of purchase. Why not try to obtain conventional financing even at a higher rate but for a short period of time till you can refinance at a better rate... Or... Purchase with vendor financing for a short period of time until you can obtain conventional financing. Either way, the contract and documents need to be prepared by a professional Real Estate lawyer...DON"T DO THIS ON YOUR OWN! Hope this helps...
