RentToOwn-HouseFinder.com
Does anyone know anything about "rent with option to buy"?
There is a company in the newspaper that advertises this, but why would someone sell their house that way? They can even get you in a house with no down payment. Any ideas? Thanks!
Public Comments
- not EVERYONE can get a mortgage with no down payment. Seller probably hasn't been able to find a buyer using normal methods, or they wouldn't sell this way
- Read the contract very carefully and get a qualified second opinion. Some people do that to move a property that has been on the market for quit some time. Remember the old saying, "If it sounds too good to be true, it probably is!"
- Rent with an option to buy means the landlord has you sign a lease for a set number of years, at a set price. At the end of your lease, if you decide you want to buy the house, all of your back rent goes towards the down payment. But, if you decide you do not want to buy, then all of the money you paid is just considered as rent and you get nothing back and usually have to move so they can get someone else in there.
- Renting with an option to buy is a legal method to move real estate in a "buyers market" when real estate is not selling. The rentor pays an amount to the home owner, part of that amount is collected and becomes part of your down payment when you decide to purchase the home. It allows the owner of the home on the market to get sufficient income (your rent) to cover their mortgage. Many times the seller has put a home on the market expecting that it will sell right away, so they go ahead and buy another home. When the first home does not sell they are then paying two mortgages. So, the homeowner is really motivated to cover that first mortgage. For the renter this is a way for you to try on the neighborhood and decide if your really like the property. It also allows you to build up a down payment. Renting with an option is controlled by a legal real estate contract -- you should have a real estate attorney review it and let you know what you are getting yourself into. There should be something in the contract about how much of your rent will go to a down payment, what happens if you do not buy the home (usually all that accrued for the down payment is not returned to the renter), and how long you need to rent with an option before you can purchase. Why would someone sell this way? They probably are having problems selling the house in today's horrid real estate market. They probably are paying a mortgage on this home and the one they live in or are going to live in. This method is common when real estate sales slow down. Again you probably need a real estate attorney to review the contract just to make sure it protects you. Good luck.
- When the housing market is slow, and buyers are scarce, offering rent with option to buy is a way to get the mortgage paid. But be cautious. Owners write conditions in the contract to protect the property (and they should), if you make a mistake, you are out, and out the money you have been paying. Make sure a RE attorney reviews the contracts for you to be sure everyone is on the same page.
