Why not rent to own!?!!?!?!?

Question

Okay i have been tring to find a real reason why not to rent a house.Just like if i was renting an apartment i would be throwing my money away,Right? I'm 19 and my boyfriend is 18 our total income for the year is at $37,000 plus more b/c he does like 20 to 30 hrs over time every week. we have really great paying jobs we want to invest in a house that why we feel that renting to own house will give us that feel rather or not we are capable of managing a house, i know some of you may feel that we are to young to bear a house of our own but we are eager also have great role models that will make sure that we are well taken care of. you may ask why not just ask them well they don't know to much about renting to own so i want do some home work see what is the reason that rent to own is not a good idea we have a little credit history for as Apartment rent and a car loan but i know that we don't have enough for a mortage loan but by the time my lease is up i would have a better chance of buyn

Answer 1

First of all, don't ever think you are too young to own a home.  

Just a few points to be mindful of:

1) Be sure to enter into a Contract for Deed (CFD).  This will protect you and the seller.  

2) Make certain (for your self) that the CFD is filed with your county Recorder's office.  

3) Make sure you are getting credit for your payments with each payment.  For example, if you had a mortgage, each payment you make would apply a portion to the principal amount of the loan.  In a CFD scenario, your "mortgage" is the contract for deed.  You should get credit for that.  This should be spelled out specifically in the CFD.  Look at it this way, you are paying out your down payment in installments.

4) Make certain who takes care of the taxes and homeowners insurance.  If the seller will pay the taxes, find out when they are due and make sure they are paid.  If not, the house could be sold for past due taxes and you would lose out on any payments you had made.

5) The CFD normally will have a time limit.  That means that after a certain time, you will have to get your own financing.  That is negotiable.  Just depends on how long the seller wants to wait to get paid.  During that time, get your credit in order.  Get ahold of your credit report(s); all 3 of them, and make sure that your credit is clean and in good shape by the time you get to put the mortgage in your name and pay off the seller.

Bottom Line, it might be a good idea to have an attorney.

Check in with a local Housing Authority or Housing Agency.  They can point you in the correct direction to get some Homebuyer Education.  Start at HUD and look for HUD approved Housing Counselors near you.

Open the link below and it will help you find one.  Good Luck!!!

Answer 2

I too have little problem with that except you are at the mercy of a landlord. When I say this I am saying any thing they do in their life could affect your home if they get sued. Do land contracts or contract for deed only and have it signed by and witnessed by a notary. Then pay ONLY BY CHECK as in 1 year or 2 you Can get bank financing and that is your paper trail of timely payment and they will go off the appraised value and do this as a refinance of the mortgage. See if they get sued any judgments can attach to any property in the landlords name and you may never know it and be forced to move out and loose your investment. Do it right and have a title search done looking for hidden liens before signing any land contract

I am a mortgage banker in TN & KY

Answer 3

You guys have it made. Congratulations, 37,000 whoa!

You definitly are ready and mature enough to buy a big house.

I am sure, the bank will give you a 200,000$ mortgage, why waste time with lease to own?

I recommend to go for it.

Answer 4

As for the negative, you've already stated, your not married, things happen, you could end up separate.  I see no problem in Rent to Own.  Actually, I am an advocate, but I do suggest to anyone who is not married to make sure they will be able to afford where they live on thier own, should something happen.  With that being said, being that you have little credit history, ask whom ever you are going to rent to own from that they report your payments to the CRA's.  It's a great way to establish credit history and increase your score.  

I suggest you also get a few credit cards.  Banks like to see that you can juggle credit lines resposibly, just make sure you don't have too many inquiries and keep your balances below 25%.  Good luck

Answer 5

Rent to own- or lease purchase option can work fine.  There can be problems however.  Basically the main reason for lease option is that the buyer won't yet qualify for a mortgage.  The lease option period is to allow you to get your credit, income, job time etc. in shape so that you can buy.  However, you usually have to put something down (say $5000.00) to the seller.  If you don't qualify after the lease option time is up- you lose that.  Also, if the owner happens to get foreclosed on - you are homeless.  (Believe me, that is happening a lot.)  If you do decide to go this route- make all payments by check- NO CASH!  You will need to prove payments to the mortgage company.  Have a contract written out & signed by all parties spelling out all the details.  Good luck- & be careful!!  Oh also, try to get seller to pay some of the closing costs & insist on title insurance to make sure there are no liens on the property when you close.