WHAT IS A RENT-TO-OWN?

A  RENT-to-OWN  house purchase (also known as “lease-to-own purchase” or “lease purchase”) is a lease combined with an agreement to purchase the property within a specified period, usually 12, 18, or 24 months, at an agreed-upon price. The buyer (you) pays a purchase fee, 1% to 5% of the price, which is credited to the purchase price of the home.  The buyer pays rent which includes a rent premium that is credited to the purchase price.  If the purchase agreement is not exercised by the end of the contract, the buyer loses both the purchase fee and the rent premium.

Note: you need to make sure that you are willing and able to follow through with the purchase you are about to make otherwise you could lose thousands of dollars.

We would like to recommend that you contact our finance professional to determine how your credit is and what price range you should stay in based on your income.  Your credit score is not as important as your history (although they are related).  Credit scores can be worked on to get them higher through various means.  Our finance pro also offers a program to clean up serious credit problems for a small fee that is credited back to you if you finance your loan through him.

HERE’S HOW IT WORKS!

An example of a purchase could be as follows:

You choose a house to purchase for $200,000.

Your monthly rent is $1,700 ($200 rent premium goes toward the price).

The purchase fee at 2% would be $4,000 which is paid up front.

The length of the agreement is 18 months.

At the end of the lease (18 months) you will be required to find financing for the home you are leasing.  The agreement purchase price was $200,000, minus the $4,000 purchase fee paid at the beginning, minus the $200 per month credited to you from your rent payment (18 months x $200 = $3,600) adds up to ($200,000 – $4,000 – $3,600) $192,400.  This is the amount that you need to acquire a loan for.

If you qualify for a FHA loan the down payment would be 3% to 5% of the purchase price.  If the house is valued at $200,000 and FHA requires 4% down, the finance amount would be $192,000.  This means that you have pretty much covered the down payment over the course of the 18 months.  You will, however, need to save for the closing costs in this example.

This program is great for people who:

• Need to save for a larger down payment.
• Have credit glitches that can be cleared up during the option period.
• Moving in from out of town and need to get established.
• Stuck in a BAD ECONOMY!
• Wish to purchase a home now at a great price and finance later.

These are the basics of the Rent-to-Own program.  Some of the terms are negotiable and same are not.  Our general terms are $200 of the rent goes toward the purchase price, the purchase fee is 1% to 3% of the purchase price and the length is 12, 18, 24 months  (The rent credit does not apply to the purchase price if the rent is not paid on time for that month).

OUR GOAL.

Our goal is to help people, that need a little assistance, to purchase a home that you can call yours at an affordable price.  We will not put you in something over your head.  We want you to be able to finance your new home when the lease is up.  After all, I don’t get paid from the owner until the contract is fulfilled.  So it is in my best interest to make sure you are in a home that you can afford.  I also try to keep your rent close to what your mortgage payment would be so that you won’t be surprised when you go to finance your new home.

It is imperative that you (the buyer) enter into a contract knowing that it is within your means to fulfill the agreement.  However, if you find that circumstances change beyond your control, it may (emphasis on “may”) be possible to renegotiate the terms of the contract.

If you need to clear up your credit during this time frame, we suggest you seek professional advice to ensure a successful transaction.
Please contact us for a referral to our professional who can work with you to help improve credit issues you may have.  I have seen him help get financing for someone that thought for sure they would need to rent.  Those were some ecstatic people.

HOW TO FIND THEM:

You can navigate through the PROPERTY SEARCH tab above and click on RENT-TO-OWN HOMES or you can click HERE to go directly to that page.

Identify the homes you that are of interest to you and send me an email or call directly and we can start putting together a game plan to get you and your family in your new dream home.

NOTE: you can also do a regular search in the “Property Searches” section and if you find something you like we can start negotiations with the owner on a possible Rent-to-Own contract.  If the owner’s situation is right, then we have a good chance to get a contract.
When you do a search keep in mind that you can select   Single family homes for sale or  Rentals separately.    Rental listings are many times owned by people who are ready to sell and renting is what the are used to.  The Sell part is a bonus.
You will find duplicates between Rentals and For-Sale searches quite often.  Those are the better ones.

Happy Hunting!

Please e-mail or call if you have additional questions.  Paul  (847) 707-0841

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