Understanding Rent to Own Arrangements
The best option for people who want to own a house but could not presently get a mortgage because of poor credit standing, is to look for a rent to own house.
Within 6 to 24 months, it will be possible for you to rebuild your credit, accrue monthly rental credits, and save money for your down payment.
A rent to own arrangement is beneficial to the buyer because you can live in the home now while you are getting your finances in order. Then you can lock the price and build down payment credits.
The home owners will also benefit much from this arrangement because this new tenant will already treat your home as his and thus will surely take care of it more than a regular tenant will. The seller will also collect a large non-refundable fee down payment from the tenant. This new tenant that desires to own the house later on will have an interest in maintaining the house until the end of the option period.
It is a very important component of the rent to own buying process that your credit be repaired. Having a good credit should be on one of the main concerns that you should be working on. A respected lender or credit repair firm is able to assist you In improving your credit standing. The seller, on the other hand, works with the future buyer to ensure that they remain on track to purchase their home.
Buyers and sellers with rent to own agreements should work together. They should pay close attention that the property is valued correctly. Otherwise, it would be difficult when trying to get financing. If the house appraisal does not match the agreed sales price, then the seller has to renegotiate in order not to lose the deal.
You should be making rental payments on time each and every month. Your lender will be able to use this on time documented payment history to the benefit of the rent to own buyer at closing time.
On time rental payments should be credited by the seller to your credit. With this credits you will be able to build up your additional down payment funds.
The title of the home should also be free and clear. If there are big liens or judgments attached to the home, the seller would find it difficult to close so it is important to make sure about this.
If you are going into a rent to own agreement, then should consider the things discussed above. If everything is alright then this agreement is viable for both parties. The buyer is able to build his credit in the process and the seller is able to sell his house.