Understanding Rent to Own Arrangements
Rent to own houses are viable options for people who want to own a home but could not, for the moment, obtain mortgage because of poor credit standing.
To rebuild your credit, accrue monthly rental credits, and save money for your down payment, you will need at least 6 ro 24 months to accomplish.
Rent to own arrangements are beneficial because even while you are still working at your finances, you can already live in the house. This will enable you to lock the price of the house and build your 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 tenant will also have to pay him a non-refundable down payment. 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. You must be proactively working on having a better credit throughout the option period. If you want to rebuild your credit standing, you can seek the help of a respected lender or credit repair firm to help you rebuild your credit standing. Meanwhile, the seller and the future buyer should work together to ensure that they are not distracted in the goal of purchasing the house.
Buyers and sellers with rent to own agreements should work together. They both need to make sure that they have the correct value of the property. 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. At closing time, this will be to your own benefit because your lender will be able to use this on time document payment history.
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.
Check on the house title to see if it is free and clear. You should look into this because the seller could have difficulties closing if they have a big lien or judgment attached to the home.
These are the things to be watchful about when entering into a rent to own agreement. This is a great option for both buyer and seller if everything is done accordingly. The seller is able to sell his home and the buyers locks into a price and has time to build his credit.