Thank you for using our Rent to Own Programs. For any concerns, questions, ideas or comments feel free to use the form below.
Thank you for using our Rent to Own Programs. For any concerns, questions, ideas or comments feel free to use the form below.
Doing a lease purchase/rent to own transaction means that you are ready to take the first step to home ownership. You are tired of renting and want to stop throwing money away every month, but your current credit or job situation will not allow you to get a mortgage.
You heard of rent to own homes, also known as lease to buy, and you wonder if it is the right decision for you. There are certain things you need to consider before making a lease purchase decision. The most important being what your credit score is right now.
In a lease purchase transaction you will be required to do an option down payment. This down payment is known as option consideration and will be applied to your eventual purchase price, or closing costs on the mortgage. Your lease purchase contracts will have two parts to it: a lease contract, and an option to purchase contract.
The option down payment is to secure the option to purchase. You are essentially tying the property up so that the owner can sell to no one else but you at any time during the lease period. In return for the owner taking the property off the market and letting you tie it up, you are paying the option down payment, which is why it is non-refundable.
Good credit is not necessary to enter into a lease purchase/rent to own transaction. It is expected that you have bad credit. If you had good credit you would simply go buy a home! The reason why it is important to you, is that your credit need to be good enough at the end of your lease period to qualify for a mortgage. You made a non-refundable down payment, and in order to get credit for it, you need to buy the property.
You need to know if one year is enough time for you to fix your credit. Because if it is not, then you want to negotiate a two year lease with the option to buy. Here is a simple rule of thumb: if your credit score is in the 400’s, you need two years. If your score is in the 500’s, you will probably be okay with a one year lease term.
Now that you have seen your credit report, you need to be honest with yourself. Is your credit bad because you always had good credit and just went through a temporary situation (divorce, job lay off etc..)? Or is your credit bad because you do not have good financial habits and you never had good credit? If it is the latter, you are now betting on yourself that you will be better in the next year or two about paying bills on time.
Since you are putting down a non refundable down payment, you are betting that your score will be good enough in one or two years. If you don’t change your old habits, you will lose that down payment when you can’t buy the house because of bad credit.
You need to establish good credit by paying bills on time. But that is not enough. You need to also have the bad items removed from your credit. This does not necessarily mean that you must pay old collections. If it is more than two years old it does not affect your credit score much, if you now start paying on it you will make it current and it can make your score go down!
I recommend using a reputable credit repair company to assist you in removing the bad credit items. They assist you to have bad credit items removed from your credit report like it was never there, without having to pay the outstanding debt. The way they do it is to use their knowledge of the Fair Credit Reporting Act to ensure that the bad credit item is valid, and also to ensure that the creditor that put the item on your report had the right to do so.
Did you know for example that many collection companies can not put the collection on your credit report (but they do). You never signed an agreement with the collection company, you signed an agreement with the creditor. Only the creditor can file a derogatory item on your credit report, unless their contract states that a third party can file it on your credit report against you on their behalf. Therefore many collections on your credit is not allowed to be there.
Having bad items removed is neccesary, but it is not enough. You also need to build good credit. Additionally, you need three tradelines (loans, credit cards, car loans etc.) in order to qualify for a mortgage. 24 months history on those tradelines are preferred, but 12 months will do. Alternative trade lines in the form of utility bills or cellphone bills can used as well.
But you may have a problem getting a credit card or a loan because of your bad credit. Don’t give up, there is a way. There are credit card companies out there that will give you a credit card no matter how bad your credit is, because it is a secured card. You give them a deposit, and they give you a card with a limit equal to your deposit. Getting this card is very important to you, because they will report your on time payments to the credit bureaus and this will really help boost your score.
You now have a lot of information. If you are willing to do ALL the above and do your homework on your credit, then doing a lease purchase/rent to own transaction is right for you.
Rent to own homes can be a good option if you cannot afford to take out a loan for the purchase price of a home. The rent you pay to your landlord goes toward the purchase price and once you have fulfilled terms of the contract you have entered into, the house is yours. Some landlords will even give you a break on the purchase price if you make your payments on time. Depending on your financial situation, rent to own can enable you to become a home owner without the hassle of dealing with a mortgage.
Finding homes to rent to own is not a hard prospect. You can start your search right here, just click the button “Browse Rent To Own Homes“. Depending on the area you live in there could be several properties that offer this option or just a few. Besides the obvious choice of consulting a real estate agent, the internet can be a goldmine of information. Spending some time researching the resources available can mean the difference between finding your dream home and having to settle for a home that is below your expectations.
If you are interested in entering into a rent to own contract, your first choice may be a local real estate agent. A real estate agent can help you to sift through the many choices available and help you to decide which features of a house are important to you. Do you need more than one bathroom, is a yard a necessity for your family, are you looking for a home that has several bedrooms or do you need a home with a garage? Another consideration may be the choice between a townhouse, attached or semi-attached property or a single family home. If you are new to an area your real estate agent can apprise you of the safety and accessibility the location and neighborhood. An agent can look through his listings and find a home that you can afford and one that meets your wish list.
Of course using a real estate agent means you will pay a commission for their services. This commission may vary from state to state, so be sure you know up front what they charge. One of the services that is included in an agent’s commission is help with the closing procedures and rent to own contract. Since it is your agent’s best interest to be sure that you are treated fairly, he can be an asset to you when it comes time to put your name on the dotted line at purchase time.
While using a real estate agent is a good option, you can opt to find a rent to own property on your own. Classified ads are a good start to get a feel for what is available in your area, but many times they are limited to a specific geographic location. The internet has several sites that you can use to search for properties. You can even post a listing of the type of property you are looking for on some sites so that when landlords list their properties they can pull up a list of people who meet their property’s descriptions.
A simple Google search will pull up sites that list rent to own homes such as this one. Compare the features of each and find the site that you are most comfortable with. Most sites require that you register and some charge a monthly fee. After you register you are able to tailor your search to the area you want, the type of home you desire and the monthly rental you can afford. Once you find properties that you want to look at you can contact the landlord and start the process of setting up a contract.
When you decide that a property is the one you want it is advisable to have a home inspection just as if you were buying the home outright. This will call attention to any defects or expensive repairs the home may need. These can be either fixed by the landlord or you can negotiate for a lower price if you do the repairs yourself. Another important person to include in the rent to own process is a lawyer. You need someone to represent you and make sure that you are protected. A lawyer can save you money and heartache down the road by examining the contract and making sure it is legal and binding.
Finding a rent to own property can be a rewarding and exciting experience. There are a few points to be aware of to make sure that you find the right home and a contract that you can afford. With some research and knowledge, you can find the home of your dreams.
There were a great many loans being approved that should never have qualified in the first place and when the majority of these end up in default it drives the economy into a downward turn, causing even more problems for the housing market. As a consequence the mortgage guidelines have been tightened to the point that many potential homeowners no longer qualify. In most cases it only requires a few items, or corrections, for them to get a loan. The problem is that if a family chooses to buy home when prices and interests are low but has to wait a couple of years to meet the qualifications, before the conditions can be met, the real estate market climbs and these families are saddled with a much larger mortgage payment and total cost of the home.
Let´s say that, for whatever reason, your credit score is too low to get you approved for a home loan but you have a stable income. Are there any options for families in this situation that would allow them to get the process of buying a home started while they are trying to improve their credit rating and qualify for a home loan? Actually there are. Many potential homeowners have decided to get involved in a rent to own home program. These programs are an excellent choice for families in this situation and have many benefits for both the tenant buyer and the property owner.
Sagging property values have caused many homeowners a great deal of difficulty selling their homes, especially if they plan to get anywhere close to what they paid for their home in the first place. Homeowners across the country are losing as much as 50% of the original value of their homes and many are desperate for solutions to this problem. Many homeowners are using a rent to own option to try to get the original value of their home or as close to it as possible. A rent to own option is fairly simple. The renter agrees to pay a set amount each month that is above the rent total. This extra money is applied to the price of the home and the renter agrees to pay the balance off within a specified period of time. The owner usually sets the final price higher than the current market value of the home as a way to regain some of their original investment and the renter has an opportunity to make payments on a home while at the same time improve their credit ratings enough to make final purchase within the time period specified.
We can easily see the benefits for the seller. Besides the chance to start paying on a home however what are the benefits for the renter? Rent to own situations are usually based on the renter’s ability to pay. In other words if your income reflects that you can meet the rent, and the house payment with it, you will usually qualify. Sellers will also want to see a target date for the renter to be able to get a loan to pay off the balance. It is rare for a seller to want to carry the payments all the way to the total. This does mean that the renter will not usually have to pass a credit check. In these days of credit checks for everything from apartment rentals to jobs, this is a huge bonus.
Finally for the duration of the contract the renter is responsible, in some case, for paying the HOA. The taxes and insurance on the home are the home owner’s responsibility. They can be released from this responsibility through the terms of the contract but you do not have to agree to this as it can amount to a great deal more cash out of your pocket.
The economy is improving and housing prices have begun to climb slowly. With a rent to own contract the price you agree on in the contract is the final price. If the home appreciates in value the only price the renter will have to pay is the original agreed on price. Once the contract is locked in the appreciation value of the home will go directly to you and your family, not the person who owns the home. Keep in mind that this only applies if both you and the owner abide by the terms of the contract. In some contracts even a single late payment can void the terms and you can lose your investment.
If you are trying to purchase a home you may find that it is not possible to obtain a mortgage from a bank for various reasons including your credit history, credit score or employment history. Banks have very strict criteria that you must meet before they will approve a home loan. You may not qualify for a loan from a bank or the interest they want to charge you may be more than you are willing to pay then the option to rent to own may be a good choice for you. Normally you enter into a contract with the landlord and after a set amount of rent is paid the home is yours. While these contracts are pretty basic there are some options for you to consider before putting your name on the dotted line.
There is an advantage to taking out a mortgage for your home. You will usually end up paying less for your home by taking out a mortgage from a bank depending on the interest rate that is set. For example, if you purchase a $300,000 home by financing it through a bank your may pay approximately $145,000 less than if you rent the same home for 30 years. This is because rent normally increases as time goes by and your loan payment stays the same.
You may have the option to rent the property for a specified time and then make a balloon payment for the rest of the purchase price. If this is the contract you choose you will need to find financing for the balloon payment. You may be able to rectify the circumstances that prevented you from getting approval from a bank by the time the balloon payment is due. If this is the case then a bank loan for a mortgage will have the best interest rate available at the time.
Your landlord may enter into an agreement with you to finance the remainder of the purchase price for your home. He would become the lending institution and it would be wise to hire a lawyer to set up this agreement for your protection. You would make your payments to him and after the allotted time you would own the home and hold the title. These types of agreements are normally for much shorter times than a traditional mortgage.
Remember that while you have a loan outstanding for your home you do not hold the title. The lending institution or landlord will hold the title until the home is completely paid for. This means that if you decide to move before you are through paying for the property you may forfeit all of the money you have paid up to that point if you are renting to own. You must be sure that your budget is adequate to enter into such a loan or contract so that you do not lose your investment.
The most common way to finance a rent to own home is for your rent payments to go toward the purchase price of the home. Generally these agreements are for as short as 3 years or longer depending on your situation. A rent to own contract is still required for this type of agreement stating exactly how much the house costs, what amount of your rent will go toward the purchase and the duration of the terms.
Any money that you can put down toward the purchase price of your home will decrease the length of the contract that is required before you can take possession of the property. Even a small deposit payment is better than nothing. Your contract should state clearly whether your down payment is refundable or forfeited should you choose to terminate your agreement for purchase.
This is a fixed rate that is added onto your loan every month for the duration of your loan. Some landlords may give you a break if you can pay off your loan before the last payment is due. Depending on the contract you enter with your landlord and if it is considered a loan you may or may not accrue interest. Normally you can expect a 1% to 5% interest rate on a loan held by your landlord.
If you choose to have your landlord carry the financing you should hire a real estate lawyer to draw up the contract. This will protect your interests and make sure that you are protected. If you enter into a rent to own contract without a lawyer’s advice you are putting yourself at risk of not having any legal recourse should the deal sour.
Examine your budget and credit. If you find it is in your best interest to rent to own a home then know your options and your legal rights.
These days getting approved for a home loan of any type is very difficult. The banks, reacting to the economic crisis are heavily regulated. The required credit score, to qualify for a home loan and higher than ever down payments are keeping many potential homeowners literally out in the cold. The problem is a serious one for many families. In addition to not being able to get a loan now, with the economy improving, housing values will rise, adding many thousands to the final price of the house and depriving them of collecting the appreciation.
Instead of buying outright many people are choosing to enter into rent to own homes agreements with home sellers. These agreements are generally outlined in rent to own contracts. A rent to own contract is actually two contracts. The first contract is the rental agreement between the landlord and tenant. This contract includes the monthly rent amount and the day it is due along with any information about late charges or maintenance required. It also includes the life span of the lease and this is usually the time needed for the buyer to obtain a loan or otherwise come up with the purchase price. These agreements last for usually three years maximum but the date is as flexible as the two parties agree on. While it is rare some owners will even agree to rent to own for the entire amount.
The second contract is the lease purchase agreement. This document is much more important than the first document. While much of the same information is included, such as the monthly payment amount, end of the lease period, and late payment agreements it also contains much more. This is a situation in which both the buyer and seller need protection. The lease purchase agreement should have all of each party’s rights outlined clearly. The following is a short list of issues that should be addressed in a lease purchase agreement.
If you have a lease rental period that is three years or longer you should understand that there are a great many things that can happen in that time. The values of homes could increase substantially and the home owner may decide that they do not want to wait. In a situation like this, if not protected by the lease purchase agreement, the buyer could lose all of their investment. The same applies to the buyer who finds a home that they like better, for a better price, and elects to opt out. The entire period that the seller has held the home off the market in expectation of this purchase is lost.
Another potential problem area is remodeling and maintenance. The lease purchase agreement should describe who is responsible for maintenance. This is sometimes a large problem. In most tenant agreements the property owner is responsible for maintenance. Because this is a situation in which each month the renter is increasing his interest in the property it can be confusing if the details are not outlined in full. This is also the case with remodeling. While most property owners will not have a problem with this, thinking that if the work is done and the family defaults, they will benefit from the appreciation from the remodeling. Depending on the amount of work to be done remodeling can increase the value of the house tens of thousands of dollars.
Another issue that can be resolved in a lease purchase contract is the addition of equipment. Alternative energy sources all require the installation of special equipment. Solar cells, wind generators, things like this are examples. Much of this equipment is very expensive. If either the buyer or the seller chooses to opt out of the contract, or they do so by mutual agreement, who keeps this equipment? Removing it can decrease the value of the property and letting it stay will cheat the buyer out of their investment. It will not be too many years before alternative energy on homes is more common than not and this will become a major issue in most real estate transactions.
In rent to own homes, a contract can be nearly anything that the parties want it to be. It can include any type of conditions that are not forbidden by law and should be designed to protect the buyer and seller equally. The best way to assure that it is done with all parties in mind is to either have a licensed real estate attorney prepare it for you or have one review it completely before you sign it.
Owning a home is not a vastly complex process but for those who lack the right experience and tools it can be very confusing and overwhelming. With any real estate transaction there are many variables to consider when deciding on renting a home, buying a home, or going the rent to own route. In this article we will be going over how you can decide for you and your family whether or not rent to own is a good fit for you.
If you notice that you’re situation includes one or more of the reasons above than rent to own may not be right for you. We urge you to be extremely careful because you could end up losing a lot of time money and effort and still not own a home. On the other hand if you have a great reason for using a rent to own strategy we are excited for you and give our seal of approval to start looking for a great rent to own deal!
Rent to own takes place most of the time in one of three scenarios. The first is that a vacant, foreclosed, or dilapidated home is bought by an investor who fixes up and sells the home via rent to own to quickly turn the property. The next scenario is where a developer builds a series of homes or condos for luxury or in impoverished areas using rent to own to entice buyers. The final scenario is when a single home owner has trouble selling their home and decides to use this method to sell.
When we look at the first scenario you might think, so what an investor made a buck off of flipping a house how does that benefit anyone but the investor and the buyer? Well, when a neighborhood has a home that is run down, vacant or foreclosed it can lower home prices nearby as well as attract crime, squatting and drug use. The incentive of that the quick turn around rent to own provides for the investor can improve home prices for everyone in the area as well as prevent many problems.
Although a developer building rent to own luxury homes or condos can some what drive up the surrounding home prices it doesn’t have quite the overall community building affect that takes place when they build a development in an impoverished area.
It’s always a frustrating story when a seller can’t find the right offer for their home and desperately wants or needs to move. Many times in this situation home either remains vacant or is run through a series of tenants. While we discussed the issues with a vacant home above, a home with bad tenants can be just as bad. Tenants tend to not take as good of care of the home and if evicted even due damage to the property purposefully. In a rent to own situation the person renting intends to buy the house and is more likely to make friends with neighbors and take good care of the home.
Regardless of the scenario rent to own homes can provide serious benefits to the community and in some cases helping it actually flourish.
There are a lot of what if’s and questions that rise during rent to own negotiations and during the term of the lease agreement. Today I would like to take some time to explain who is responsible for what and when. As I’ve said many times knowledge is the key to successful real estate transactions, so this is a must read and some serious real estate ammunition.
One of the biggest controversies in rent to own is who holds the responsibility during the rental period for home maintenance and repairs. Why this is such a controversy is because the answer is, it depends. The reason why the rent to own agreement and legal counsel is so important in this process is because you need to decide ahead of time who holds the responsibility for these things. Generally these things would fall on the current owner but be careful to get this in writing. This is also one of the advantages of rent to own, even though you would lose your down payment you could walk away from a house that’s practically falling apart.
Although there may be some confusion on these two items, it is fairly straight forward. The law clearly states that the responsibility for both taxes and insurance belongs to the name on the deed for the house. Even if the rent to own contract states that the buyer will pay the property taxes or insurance the final bill is left with the current owner. However it would be smart for the renter to purchase renters insurance until the time in which they outright own the home.
Unless the buyer has specifically sought out a realtor to help them find a rent to own home the payment of the agent would fall on the current owner. There are several ways the realtor can be paid either as a portion of the excess rent every month, a 1 time fee at signing, or the rare and unlikely event of them getting paid when the renter transitions into the owner.
As you can see as long as you cover your behind in the initial agreement much more of the responsibility falls to the current owner, which is also why the buyer agrees to a non-refundable down payment to offset the amount of risk the seller is assuming. If you have any other questions on who is responsible for what feel free to email us and we’ll get back to you.
Rent to own is often referred to as a less than desirable situation in the main stream media or by uninformed real estate agents but there are many reasons why rent to own is great for buyers. Check out the 5 simple reasons why rent to own is a better deal than you thought.
It is one of the only methods available that gives buyers the ability to simultaneously work on their credit while working toward home ownership. This is a true two birds one stone scenario, where you don’t have to continue to rent a home you will never own while you work on fixing your credit to get a loan approved.
Rent to own can help buyers save up money for a down payment while having a place to live. Saving is hard work and it’s even harder when you’re a young family or have low income, but with rent to own your saving for a down payment is built right into your monthly rent payments.
In the right market rent to own can be used to lock in a sale price in a market where prices could rise. This helps buyers not get out priced in a market with rising prices while they work on down payment, credit, and other financing issues.
If something seriously wrong is found with the house you can walk away and the only thing you will lose is your option fee. Instead of being stuck with a home with disastrous foundation problems or in need of a new roof you simply walk away. This is a serious advantage to buyers, especially those with limited funds to make big repairs.
If you use a good real estate attorney separate from the seller you can ensure there are no unfair loop holes and that you are fully aware of all the terms of the contract. The use of a real estate attorney easily defeats possibility of a shady home seller pulling a fast one on unsuspecting buyers.
While there are some things that could go wrong with rent to own or any real estate transaction, hopefully now you can see quite a few more benefits on the pro side opposed to the cons. For more information on rent to own visit our homepage to find guides and how to’s.
When you buy a home through the rent to own process, the most important aspect is determining the length of your option. This is the amount of time you spend renting while getting your finances in order, fixing credit scores, saving up a down payment, or deciding if you really want to buy a home. While ultimately the seller controls this time period, you need to know what your situation truly warrants before you enter a lease option agreement. You should always walk away from a seller who has unreasonable expectations on the length of your option.
Each rent to own buyer has a unique situation so today We will dissect each case separately and explain the range of time needed for the circumstance. The one overarching tenet of this process is that you should absolutely without fail be working with a mortgage broker from day 1. This will ensure that you will be able to buy the home at the end of your lease agreement if you choose to do so.
12-36 months if no bankruptcy or foreclosures have occurred.
In determining the length of your option you need to know how long it will take to fix your credit rating. With a few small credit dings containing a couple of late payments you should be able to raise your credit score significantly in 12-24 months of on time payments along with the reduction of overall debt. With more severe credit problems containing lots of missed/late payments along with some debt being sent to collections it could take 18-36 months to rectify your scores. If you have any major credit flaws like a bankruptcy, foreclosure, repossession, it can take 3 years or longer to get your score high enough to get approved for a loan. If you have poor credit we suggest you meet with a qualified credit counselor as well as a mortgage broker before you even think about signing a rent to own contract. They will be able to give you a more exact timeline for your score improvement as well as when it will be possible for you to qualify for a loan.
As long as you need, if finances are in order.
Many people look to use rent to own as a means to check out an area or neighborhood before committing to buy a home. If this is your only reason for utilizing rent to own the determination of how long your option should be is personal decision. However, it can take up to a year or longer to really get to know an area. To speed this process up you will want to do a lot of research on schools, crime rates, economy, traffic, and anything else that affects your daily life. In addition to doing your research and finding a house you want own, be sure to meet with a mortgage broker to get your finances in order so you can get a loan when the time comes.
12-36 months, be sure to do the math!
Buyers often utilize the rent credits and down payment assistance frequently found in rent to own agreements in order to save up enough money for a down payment. This is a great option for young home buyers or those on tight budgets. To calculate the length of the option needed if saving up a down payment is the missing link to your home purchase you need to do several things. First, meet with a mortgage broker as discussed in previous scenarios and find out what kind of down payment you will need to get financing how much you can afford etc. After you have these variables you simply do the math on how long it will take to save up the required amount. If you are planning on including saved money outside of rent credits as a part of the down payment it is crucial to get on a household budget and allow 3-4 extra months in case it takes longer than expected to save the money.
12-24 months depending on debt levels and income.
With mortgage regulation under extreme scrutiny a buyers debt to income ratio has to be at a reasonable level before you can be qualified for a loan. In this scenario the length of your option is based off of how long it will take for you pay your debt down to an acceptable level. In today’s market an acceptable debt to income ratio should be around 38, in other words the total housing expenses plus outside debt should only amount to 38% of the buyers total income. Determine your timeline using debt pay off calculator as well as a monthly budget to achieve the pay off on time. Just like down payment savings debt payoff should be given several extra months of breathing room, just in case of unexpected events.
Entering into a rent to own or lease option agreement is not something that should be taken lightly and if you fail to execute your option within the timeline decided you can lose your down payment and rent credits. The average option length including extensions can be anywhere from 3 to 5 years so make sure that you can fix all issues preventing you from a traditional home purchase in that time frame. The easiest way to do this is before you start looking for homes to meet with a mortgage broker, get on a budget, seek credit help if necessary, and get educated on the process.
The following is going to sound as if I’m trying to “sell” you on the idea of buying a home. I’m not. It’s just that I firmly believe that in almost every instance, if you can buy your home, as opposed to renting it… you should. Why?
FIRST, make no mistake—right now, at this very moment you are already buying a home. The only question is, are you buying it for you and your family or for your landlord.
SECOND, there is no security in renting. In my years in the real estate field, I can’t even begin to tell you how many families I have seen, that were uprooted when the landlord decided to rent to his niece, or decided to cash in his investment. Families had to move, kids had to change schools, make new friends, etc… It’s tough on the family and tough on the kids.
THIRD, Right now, if you are renting, you are buying the home that you live in– for someone else. You are making their payments! Your money is lowering their principle balance—eventually, they’ll owe $0—but you’ll still be making payments! As the property appreciates—as it ALWAYS, eventually does, the landlord has more in assets, has more money, and what do you have? You still have payments– that are increasing every 6 months or so!
Oh, and something else about the payments that you are making for them– They use YOUR money to make THEIR house payments and then they get to deduct the payment they made with your MONEY on THEIR taxes!
FOURTH, We all know this one. Historically, no investment is more secure or so consistently appreciates as does real estate. This doesn’t mean that there aren’t times when the market goes flat or even loses some value. But these are historically rare and short lived. I’ve been in the real estate field since 1976 and have seen prices dip only twice. Right now, in some areas of the US there is a slow down and in some areas, even a slight down turn of prices. But still over 60% of the US is appreciating!
Obviously, the very best time to buy ANYTHING is when it is at it’s lowest and preparing to rebound—buy low sell high! The problem is that no one ever really knows what constitutes the very best time to buy. But this we do know, ABSOLUTELY NO ONE WHO BOUGHT A HOME IN THE LAST 50 YEARS, OR SO, AND KEPT IT FOR AT LEAST 2 OR 3 YEARS, EVER LOST MONEY!
In real estate no one ever loses money by buying at the “wrong” time. They only lose money by buying too late or not at all.
First, as we’ve already discussed, on those rare occasions that prices DO drop, they rarely drop far, they never drop for long and they ALWAYS go back up. If you believe they are or have dropped a bit, this is the time to buy and get it before they pop back up—which they ALWAYS do. The only way to ever know that a market has hit it’s bottom (the absolute best time to buy), is when you’ve seen a consistent rise in prices—and by then you missed it and are paying more than you otherwise would have. And remember, while you are sitting there waiting for the “bottom” you are still buying a home for someone else and getting no tax breaks, whatsoever, on your hard earned dollars.
In today’s market this issue is the most easily overcome. The newest loan programs allow for No Down Payment loans in an unbelievable number of cases. Now just to be clear, No Down Payment is not the same as No Money to Close. You would still usually need to have closing costs available, usually about 1% to 3% of the sales price. But that is usually about what would be required for first, last, and deposit on a rental. Furthermore, if you move into your home on, let’s say, August 1, you don’t owe rent in your previous home for that month, PLUS your first houses payment is not usually due for about 45 to 60 days after the close of escrow. Since you don’t have to pay that last month of rent and will probably be getting a deposit back plus the fact that you have no payment due for 45 days or more makes it relatively easy to find the closing costs necessary to become a home owner.
People have the belief that the higher the down payment, the lower their payments will be. This, of course, is basically true. The problem arises when there is an incomplete understanding of how all the financial numbers actually pan out.
First- realize that for every $1000 down, it saves only about $8 or $9 dollars per month in payment. So, if a person puts an extra $10,000 in down payment they saved about $90 per month. Now there’s nothing wrong with a $90 savings but at what cost?
If you save $10,000 over the course of a year, hypothetically, you can save $90 on your mortgage. The problem lies in the fact that very few people can save money as fast as real estate goes up in value.
Over the last few years nationwide appreciation rates have been anywhere from 8% to 15% and in many areas even much higher. Let’s assume you wanted to buy a $200,000 home in an area with Low Appreciation of only 8%.
In a year you would have an additional $10,000 for a down payment. But at 8% appreciation that $200,000 home is now worth $216,000. You put the $10,000 down but would then owe $206,000 instead of the $200,000 you would have owed if you had bought Now! So you would actually have a monthly payment that is even higher than it would have been if you put ZERO down today, plus over this year you would have had no income tax write off, and you didn’t get the benefit of the appreciation.
On the other hand, if you had bought today, next year you would have had $16,000 in equity, placed no money down, and would have been able to take advantage of a year’s worth of tax advantages.
The bottom line is that buying today and taking advantage of a No Down home loan or personal loans makes more sense than seeing if you can save money faster than real estate appreciates.
Many people are interest rate conscious when what they should be is bottom line dollar conscious. What does this mean?
I’ve seen many people walk away from a transaction that I knew was the very best thing for them, just because they didn’t like the rate. They thought “if I can only pay off a couple of bills, next year this comes off my credit, then my score will be higher and I can get a better rate”. Again, in isolation this makes perfect sense, but in the real world where everything interrelates, it’s much more complicated.
For example. “When this comes off my credit, I can get a better rate”, or “I hear next year the rates will be lower”…
Many people who are rate conscious will fall into the trap of looking to the rate rather than the bottom line. Let’s assume that as buyer they are correct that if they wait they can get a better rate. Realize, on a $200,000 loan, an interest rate reduction of a full 1% will save about $130 per month. Now this is a big savings, but what is the cost?
By waiting a year until they could get that 1% lower rate, they would have saved 12 months of $130 over what they would have paid for a total of $1,560 in payment savings. But for that year, they were still a renter, buying a home for someone else, letting someone else have that year’s tax deduction, paying off someone else’s house—last but not least, remember, all the homes have been appreciating that year.
So, in order to save $1,560 in interest, the following situation has been created…
Now, when they do buy a home, assuming a 8% appreciation rate, the same property is going to be an additional $16,000 dollars. So…
They lost $16,000 in equity…
They are actually paying $16,000 more for the same home
Because the house costs them more, their payment will still be as high as it would have been if they had bought now, with the 1% higher interest rate! So when it is all said and done, they didn’t even lower their payment!– and lost $16,000 in equity.
All to save $1,560!
And remember, if the credit improves or the rates DO go down, refinancing is usually an option!
I’m the first to admit that there are legitimate reasons to Rent, even if you qualify to buy. But for your and your family’s sake, don’t use the above reasons for not buying.
Owning a home is part of the American dream and something that everyone should be able to accomplish. People used to think of buying a home in their 40s and 50s when they had enough savings and disposable income to afford it. Gradually the trend started to drift towards people buying home after spending a few years in their career field. Provided that they saved enough money for a down payment and had a decent credit rating.
Though due to the economy, loss of income, or poor credit ratings people started to not be able to own a home and ended up renting.
To maintain the American dream people came up with an original way to combine renting and and owning a home. This is process of buying a home is referred to as rent to own homes. It works by allowing the rent you pay for your home to be applied towards the selling price of that home, also known as a rent credit. Once the buyers have had a chance to clean up your credit, paid the price down far enough to get a loan approved, or saved enough money to make a sizable down payment you have the option of purchasing the home.
Not only is this a pocket friendly option for the new generations seeking to purchase a home of their own it also is a safe way to find the perfect home without getting a mortgage immediately. Also, the amount invested by you in the property should give good returns as the property values increase and but also offers a safety net if they don’t because you always have the option to not purchase the home.
When choosing to buy a home through a rent to own contract you might be relieved by the idea that you have typically three years to come up with the money to buy your home, your credit score does not have to be perfect and that as you live in the house a portion of your rent will go towards the payment of the house. While this sounds infallible, it is essential that you carefully look over your contract before you sign it and realize that some homeowners may be hoping to take advantage of your situation.
The contract may be 10+ pages and your eyes might be growing weary from technical style but it is important that you read and understand every part of the lease. This is because even minor details could cause you to lose your home and your invested money. With this in mind, make sure you know and understand everything in the contract that could lead to eviction, such as unpaid pet deposits or roommates living in the house that are not on the lease.
As you know, many states have suffered from a poor housing market and many families continue to lose their homes. This is good reason to be wary before signing a rent to own contract. If the seller’s home is under foreclosure you could lose everything you’ve invested in the house. Because of this, make sure the seller provides you with proof of current mortgage statements and payment information. Another thing you can do is require the seller to send you proof of your payments each month in your contract. This will be proof that the seller is using your money to make payments on the house and not pocketing it.
You do not want to sign a rent to own contract without ensuring that everything in the house is in working condition. This is because some sellers will try to get you to sign the contract and then name you responsible for making all repairs, even for pre-existing conditions. If something is not working in the house, require the seller to fix it before you sign the contract so you won’t get stuck with the bill.
This step is highly recommended because lawyers are trained to read documents and contracts to catch loopholes or contradictions. While it is important for you to look over your contract carefully and read through the entire thing, a second opinion could save you from an unfair agreement and a loss of money.
Whether you are a buyer or a seller, a rent to own home may seem like your best option. For buyers, renting to own means you will have a better chance at buying a home even if your credit score is bad. You will be able to live in the house during process, which is an average of three years. For sellers, you will have more time to sell the house without paying double mortgages. However, the most important factor when choosing to rent to own is to create and agree on a thorough contract to avoid any loopholes or misunderstandings.
When choosing the price of the house, the buyer and seller must agree on a price. Once that price is in the contract it cannot be changed unless the buyer’s lease is up and the buyer chooses not to buy the house. This means you must take into consideration the trends of the housing market and prices of houses in similar neighborhoods to yours. This is a gamble because as housing prices rise or fall the price you choose for your house will remain the same.
In rent to own homes – an option fee is a portion of money paid that goes toward the down payment of the house if the buyer chooses to buy the house at the end of the lease. If the buyer gets evicted, cannot afford to buy the house or chooses not to buy the house when the lease is up the option fee is profit for the seller. The rent premium is the rent per month plus an extra fee that goes toward the down payment of the house. Buyers must carefully make sure these fees fit into their budgets before agreeing to them because if a payment is missed they could be evicted.
After deciding on the money aspects of the deal you will need to come up with a contract that includes this information as well as stating that the buyer/tenant has the option to buy the home at any time before the lease expires.
Because the buyer is a tenant until the home is purchased, the seller is responsible for fees such as homeowner’s insurance and real estate taxes. However, the seller can decide the terms of the lease and decide whether or not the buyer is responsible for lawn and pool care and general upkeep. The seller must also come up with house rules and reasons for eviction. This is necessary so that the buyer/tenant can be evicted if she violates the law or severely damages the property.
Before you sign a rent to own contract you may wish to have a lawyer look it over to determine whether or not the contract is reliable. This is recommended for both buyers and sellers in order to avoid bad situations such as inability to evict an unlawful tenant or unfair eviction of a law-abiding tenant. The goal is to create a successful situation where a buyer can buy a house and a seller can sell a house.
If you are new to this subject and want to start from the scratch, it is advisable first to read as much as possible on dating. Internet provides you with access to many websites that compile lists of dating websites along with short descriptions of what each site has to offer. Most of the time, they are also accompanied by reviews and comparisons too. These instructions are to be had for both free dating sites and other websites. It pays to sharpen your knowledge about how dating websites operate before you take the plunge.
When you are ready with enough know-how on dating online, select a website that provided those services free or for a fee. The free websites, clearly, have lesser number of members and attractions than the paid services have. Hence, the paid dating websites give you more parameters to narrow down your search for the ideal date you have in mind than the free dating websites. In spite of everything, it could be your other half you may discover in the end.
Another remarkable feature about dating websites on the internet is the availability of specific websites for daters who are particular about their specific needs and wants. Some guides have directories compiled of such dating websites so that the prospective dater could avail himself of such information to suit his needs. Several such sites are identified by names such as Christian dating sites, UK dating sites, Single parent dating sites and Adult dating sites.
Last but not least, let me warn you, however. The Net is reputed to be full of crooks who are ready to pounce on the unsuspecting users. Therefore, every precaution should be taken not to fall prey to such scammers. Simultaneously, refer reading materials that impart hints on things-to-do prior to casting your lot with dating websites. Prevention is better than cure, they say.
There are two types of claims that will be found in a patent:
and dependent claims.
Independent claims are claims that stand by themselves and comprise a set of limitations (or elements) that define the scope of an invention.
Dependent claims are those claims that include all the limitations of a particular independent claim but also add one or more additional limitations. They do not stand alone and always reference another claim.
A typical issued patent usually has 1-5 independent claims and 0-30 claims that depend from one or more of the independent claims. There is, however, no limit to the number of claims that may be included in a patent application or a patent, although only 20 claims, of which three can be independent, are provided for with standard filing fee. Additional fees are assessed for a total number of claims in excess of 20 or independent claims in excess of three as explained on https://www.glassdoor.com/Reviews/InventHelp-Reviews-E152162.htm.
Practically, a patent examiner will limit an inventor to claims related to a single invention, so patents rarely issue with more than 30 claims. Since 20 claims are included with the basic filing fee, only in very rare circumstances should an application be filed without 20 claims.
Further, if a fraction of the twenty claims are allowed by the patent examiner during prosecution, your patent attorney should request that he be allowed to add dependent claims to the allowed independent claims until the maximum number of 20 is reached as shown on https://blogs.cornell.edu/react/inventhelp-taking-inventions-from-paper-to-the-global-marketplace-hinges-on-usp/. This will not always be possible but it is almost always better to have a patent with more claims rather than less.