Most people know what to do when they are financing their own home but what are the steps you should take when doing a rent-to-own?
First of all, find out about the company. Who makes up their team? What kinds of properties do they purchase? What cities do they operate in and why?
For instance, Rent House 2 Own, is a team of highly professional and experienced professionals, including a mortgage broker, real estate agent, a real-estate lawyer, and accountant. We also have in our Rolodex, relationships with property inspectors and appraisers.
We purchase single-family homes that are move-in ready and that are in good areas with schools and amenities nearby.
We also purchase properties that fit the following criteria: the area must have job growth; the area must have improvements in infrastructure; the area must have more people moving in than moving out; and finally income levels must be rising.
Second, know what the purchase price will be at the end of the term and how much deposit is required?
Many reputable rent-to-own companies will operate the same way. You will be told what the purchase price will be 2 years or 3 years out. You should also be told what the minimum option payment (deposit) will be. Some companies, such as ours, will work with people who have a smaller deposit, but who can pay the higher rental amount – why is that? Well a reputable company, wants to make sure that you will qualify for financing at the end of the term. Many companies will end the term, if you cannot qualify and keep your deposit. Make sure to inquire if the company will extend the term, if you don’t qualify and also make sure that this caveat is included in the contract.
If you are not satisfied with the company’s current property offerings, ask if they will work with you to purchase a home of your liking. Most reputable companies will assist you with this option, as long as you have good credit and a good income.
Many people enter into a rent-to-own agreement, because they cannot qualify for a mortgage at the present time, due to bad credit problems. Inquire if your company will help you to fix your credit, while leasing the home. Our company along with our mortgage broker, offers free credit counseling – why? Well again, we want to make sure our potential tenant/buyer will qualify for financing at the end of the term. The minimum amount of course is 5% but the goal is to save and qualify for a higher down payment. By working on your credit, it is possible to qualify for the 5% down.
Third, before signing the Lease Agreement and/or Option to Purchase Agreement ask to see the house inspection. You wouldn’t buy a car without knowing if there were problems – why should you buy a house in 2 or 3 years without knowing if the foundation is secure or if the roof is in good shape? If the owner denies you that right – walk away!
Rent-to-Own can be the way for so many people to have home ownership – just know what you are getting into, (like anything else) and who you are getting into it with! The rest is easy peasy!
To Your Wealth!