What to expect from this guide
- Chapter 1What are Rent-To-Own Homes?
- Chapter 2Pros and Cons of Lease Options for Home Buyers
- Chapter 3Pros and Cons of Lease Options for Sellers
- Chapter 4Frequently Asked Questions about Rent-To-Own Homes
- Chapter 5Figuring Out a Budget
- Chapter 6Where to Find RTO Homes
- Chapter 7Searching for RTO Homes on RealtyStore
- Chapter 8Key Tips for Home Buyers
- Chapter 9Getting One's Credit in Order
- Chapter 10RTO Homes are not for Everyone
- Chapter 11Getting in Touch with Rent-To-Own Sellers
- Chapter 12The Lease Option Purchase Contract
- Appendix ASample Lease Contract
- Appendix BFinal Buyer Checklist
- ConclusionAfter The Contract is Signed
Introduction to the Rent to Own Home Process
Currently, the pulse of the United States real estate market is weak. Recent statistics show a rise in foreclosures once again across the country. Homebuyers find it difficult to quality for mortgages from traditional lenders, since lending standards are tighter than ever. These problems with the real estate market have led homebuyers to pursue non-traditional home buying options, such as rent to own homes. While this buying method has recently surged in popularity, it is not a new concept. Lease option homes have a long history, but recent difficulties in the real estate market have brought this non-traditional option to the forefront for those looking for a way to realize the dream of homeownership.
Rent to Own Homes are an Alternative to Traditional Home Mortgages
In the past, taking out a home mortgage has been the financing method of choice for most buyers. However, after crash of the housing bubble in 2008 and the subsequent economic downturn, the real estate market changed drastically. The disaster with Fannie Mae and Freddie Mac led lenders to begin tightening lending standards to avoid similar disasters in the future.
Qualifying for a home loan is difficult for all prospective homebuyers that do not have excellent credit. Consumers who may have been able to qualify for a home loan in the past may no longer have that option, which means that they have to look for an alternative way to make their homeownership dreams a reality. Rent to own homes offer an excellent answer for many consumers.
What's Involved in the Rent to Own Home Process?
Rent to own homes transactions work in a different way than a traditional home rental or a traditional home purchase. In a traditional rental situation, the renter just pays monthly rent installments to his or her landlord without the option to ever own the property in the future. In a traditional homeownership situation, an individual purchases a home outright by making a down payment and qualifying for a home mortgage loan.
However, rent to own homes allow an individual to enter into a contract with the current owner of the residence, which says that he or she will have the option of buying the residence at any point during the rental period. Such an arrangement is what makes rent to own homes agreements so much different than just the traditional rental or purchase transaction.
Who Can Benefit from Rent to Own Homes?
Consumers in many different situations may find rent to own homes a viable option when looking for a way to achieve homeownership. Prospective homebuyers who want to own a home but need time to prepare will find this option helpful. For example, the individual could have credit problems or difficulty qualifying for a home mortgage loan. In these cases, entering into lease option arrangement can enable individuals to live in the home while repairing credit or working to qualify for a home mortgage loan. The renter can actually occupy the residence of their choice until financially able to make the purchase, which will normally occur at the close of the rental period.
Purchasing a home does not have to remain a dream for consumers today. Rent to own homes offer an excellent solution to buying a home, but they can be confusing. It is important to be well informed on the topic before deciding to go this route. Throughout this book, prospective homebuyers will find helpful information on lease option homes, how they work and important tips to working through these transactions.