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Chapter 10: Rent to Own Homes Are Not For Everyone

Many prospective homebuyers find rent to own homes to be an excellent option that fits their unique financial and home ownership needs. Those who need time to improve their credit can benefit from lease option properties. Individuals having a tough time qualifying for a mortgage also make great candidates for lease to own homes. Of course, rent to own properties may not be for every potential buyer. Take a careful look at instances where renting to own may not be the best solution for a homebuyer’s needs.

Individuals having a tough time qualifying for a mortgage make great candidates for lease to own homes.

Discipline

Homebuyers must have discipline to make a rent to own property work out. For instance, if a homebuyer does not have good credit, then they must work hard to fix the bad credit in order to qualify for the financing needed to buy the home at the end of the lease period. Those who need some time to save up for a down payment must be disciplined enough to work hard to save the down payment money before the end of the lease period so they can make the final home purchase.

Some individuals have bad money habits that have led to financial downfall and without discipline, this home buying option will never work. Homebuyers who do not feel they are discipline enough to make the changes needed to go this route should consider another option when they are ready to purchase a home.

Mortgage Readiness

When entering into rent to own contract, buyers need to prepare to qualify for a mortgage, which will probably be needed to finance the final home purchase. Various things will need to be done to make sure the buyer is ready to take out a mortgage. Buyers need to work on paying the monthly rent amount on time and should also ensure that all other bills are paid on time as well.

Those without credit will need to work to establish good credit in preparation for mortgage qualification. Potential buyers with credit problems will need to take steps to fix those problems before they are ready to apply for a mortgage loan. Individuals unwilling to prepare to take out a mortgage should be ready to make financial changes and take action to ensure they qualify for the needed financing.

Indecision

Rent to own homes require commitment on the part of the homebuyer.  The goal of homebuyers is to eventually be able to purchase the home of their dreams. This means that homebuyers must stick with the home until the end of their contract or they will encounter certain consequences.

If potential buyers are experiencing any indecision before entering a lease option contract, it is best to avoid making the commitment until they are ready. Walking away from a contract will result in losing the lease option fee as well as the rent paid, so this option works best for those who are sure they want the home before making the commitment. Those who may have to move in the near future or those who may face frequent job changes should probably rethink this home buying option.

Steady Income

Making the financial commitment to purchase a home requires a steady income, no matter the exact method of purchase chosen. To afford rent payments and future down payments, prospective buyers must insure they have a steady income coming in before signing a lease option contract.

Not only is a steady income important when paying the lease payments on rent to own homes, but when applying for financing at the end of the lease period, homebuyers will be required to show lenders proof of steady income. Most lenders require applicants to show steady income for at least the past two years.

At a Glance

  • Those without financial discipline may want to reconsider before choose a lease option home;
  • Rent to own homes are not for people who are not committed to preparing to qualify for an eventual mortgage loan;
  • Homebuyers should avoid signing a contract if they are indecisive about the home;
  • Rent to own homes are not for buyers who may move in the near future;
  • A steady income is essential for those who want to pursue lease option homes.

Next: Contacting lease option (rent-to-own) owners

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