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What about RENT TO OWN? Is that a good option?

Hello everybody again! I was thinking in this option, until I can bump my score up, my husband can have a SS and we save more money for a down payment (at least 10%)...what do you reccomend? How does it work? THANKS!!!

Public Comments

1. Ariel, I wouldn't advise anyone to do a "rent to own" or lease with option" in today's market. Your biggest problem would be if the owner defaulted on the mortgage. So be sure they stay current. You have a right to know whom the lender is and the specifics about the loan.
2. No! Just rent the cheapest place you can settle for. Rent to own is more expensive both for renting and the buying end. It attracts dishonest sellers because it is unregulated and no standard contract forms. If you improve your scores you won't need 10% down. FHA for example requires 3% down. If you use these ideas you will have your pick of the entire market rather than having to settle for the few that are available from the "rent to own" scam.
3. Do not do a rent to own option. Instead do what is called a 100% wrap around loan. Meaning the current owner is the bank. He sells you the house and holds a note for the price of the house for say a 3 yr term at a certain rate,let's say 7.5%. You then are put on the deed. He files a deed of trust. Then you make payments directly to him. This way instead of "renting" you are owning. Also your checks to him will be proof to a traditional lender that you made the payments when it comes time to refinance. Most people have never heard of this. It is perfecttly legal and in this tight time it will become very popular. I have many clients that have used this method. If you are interested for more info please contact me at mohrloans@yahoo.com
4. If you listen to the guy above you could be in serious trouble take the advice of the first person that answered they are one hundred percent.
5. Well, since I specialize in Rent-to-Own's, I'l chime in, too. RTOs, when properly structured (i.e. the house is held in a land trust and you are made a co-beneficiary of the trust) are a very safe and effective method of obtaining home ownership when you have good jobs/cash flow but weak credit. Many of my clients are recovering from bankruptcy, medical bills, divorce, etc. or they are self-employed and show little income to the IRS and can't get a mortgage. Regardless of the reason, they need a house, they can afford a house and they dont' want to throw the money away on rent. I can put you in a house for 5% + the 1st month's rent. You also get the FULL TAX BENEFITS of home ownership which can be a huge benefit (much better than "rent credits"). In my deals, you also get 50% of any appreciation that's taken place while you were a tenant. Over 90% of my clients end up buying the home, btw. Because the house is held in trust, and you're paying the Trustee, there is NO danger of the mortgage not being paid as long as you're paying your rent. The trust also protects the property from lawsuits brought against you or the seller. If you're interested in doing a rent-to-own, contact me. Even if you're not in my area, I work with investors nationwide who do the same thing.