Rent to own homes or lease with option to buy homes are becoming more and more popular thanks to the implosion of the mortgage market. If you are serious about owning a home, but cannot get a mortgage right now, a rent to own home can be a great decision for you. Let’s look at some of the key buyer benefits!
Build Cash towards Your Purchase
Tired of throwing money on rent and making your landlord rich? Then it may be time to start looking at rent to own homes listings! With homes for rent to own, a portion of each monthly payment that you make will be credited to you towards the purchase price. This is called your rent credit. With right program, most homes offer a 3% rent credit.
Potential for No or Low Cash Out of Pocket at Closing
Because you are building up equity via your rent credit, there is the chance that you will not have to put any additional cash down when it comes time to get a mortgage. Also, many lenders will count this transaction as a refinance as long as you have been in the home for more than a year. This also helps reduce the amount of additional cash out of pocket.
Of course, mortgage guidelines change all the time. To be safe, you should plan on saving for a down payment just in case!
Less Cash out of Pocket Now
With houses for rent to own, you are looking at putting between 3% and 5% down in most cases. If you were to go get a mortgage with damaged credit, you would be required to come up with 5% down plus closing costs – and that is if you could even qualify!
Quick Approval and Move In
Have you ever applied for a mortgage and waited to hear back to see if you were approved? And then days after you were told that you were approved the underwriter came back with a whole list of additional documentation requested! Nerve-wracking isn’t it?
With a rent to own home, you know right away if you are going to qualify. And, once you find the home of your dreams chances are you can move in right away. No waiting nervously for weeks for a closing that may or may not happen!
Credit Issues? No Problem
Few things are more humbling than searching for a rental home and being told over and over that your credit just isn’t good enough. (It’s bad enough being turned down for a mortgage – but a rental home?)
Rent to own homes are a great solution if you have credit challenges. Most programs, have NO CREDIT QUALIFYING!
You Profit from Appreciation
Now, granted, appreciation is not something you hear a lot about in the current real estate environment. But slight as it may be it does exist in most markets.
When you execute a rent to own contract, the eventual purchase price is agreed upon up front. This means that any appreciation over and above this amount increases your net worth when you finally close on the mortgage.