Rent To Ownlease Purchase Frequently Asked Questions

What if I have less than perfect credit?

Rent to Own/Lease Purchase programs are specifically designed with your situation in mind. Sellers of Rent to Own/Lease Purchase homes expect a buyer/tenant to have less than perfect credit and they are decidedly marketing to you. Qualification for a Rent to Own/Lease Purchase home ownership program is based more on your ability to make the monthly payments and to put down a reasonable down payment than it is on your credit score. The lease term before the final purchase is to allow you time to repair your credit, and live in the home you want while improving your credit score.

How can I be sure that my credit will be good enough to buy before my term expires?

This will all depend on you, and your specific credit circumstance. If all you need to do is pay off a few items and you can get that done, then you're fine.

If you have any of the following: open collections, judgments, or a bankruptcy on your report, you will need assistance. Below are 3 steps to take under these circumstances:

·         Get in touch with a reputable professional loan officer and have them pre-qualify you. They will tell you exactly what you need to work on so you can qualify for a loan.

·         Join a reputable Credit repair program. With their help you may qualify for a loan within 6 months of joining such a program.

·         Being responsible with your credit during your Rent to Own/Lease Purchase term is a necessity. It is imperative that you do not open any new accounts or make any additional debts.

If you have to open any accounts, consult with your loan officer before you do so that you can understand the impact this will have on your credit. Sometimes it can be a good thing as it shows your willingness to make payments on time. Even if your scores are good it can also seriously affect your debt to income ratios and cause you to not qualify for the loan.

How much will I need to put down for the Rent to Own/Lease Purchase program?

The customary percentage is 3% to 5% of the agreed upon purchase price of the property. The higher down payment you have will make you more attractive to the Seller, instead of others who may also be interested in the same property. It is also easier to qualify for a loan/mortgage later as your down payment has already been made. Keep in mind that if you decide not to buy the Rent to Own/Lease Purchase property when the time comes, this down payment is typically not refundable.

Does Rent to Own/Lease Purchasing work in my area?

Rent to Own/Lease Purchasing works well in all markets both up and down and in any country that has a free market economy where Rent to Own/Lease Purchase agreements and option agreements are legal. Rent to Own/Lease Purchasing is legal in all 50 United States & Canada.

Can I get into a Rent to Own/Lease Purchase program if I am currently renting?

Yes. While you are renting, for example you want to expand from an apartment to a house, is a perfect time for you to start repairing/improving your credit score, start a savings account for a down payment on the new property and check out neighborhoods for a Rent to Own/Lease Purchase property that is available in your desirable location. Getting into a Rent to Own/Lease Purchase property is not something you can jump right into. It will take time and the more prepared you are will improve your situation when the time comes to own a new property.

Are there any drawbacks to a Rent to Own/Lease Purchase?

If you are a Seller/Landlord an "equitable title" claim by your buyer/tenant could pose an issue. If you are a buyer/tenant then you would want to protect your option money if the seller/landlord disappears, dies or decides they don't want to sell.

Do I need a real estate agent with a Rent to Own/Lease Purchase program?

No. In many cases this will save you 4-8% of the selling price. That could mean thousands of dollars in savings.

Are real estate agents receptive to a Rent to Own/Lease Purchase contract?

Most agents believe they will not receive a commission if they list the property as Rent to Own/Lease Purchase. Realistically they would receive a commission, but it would be 12-24 months down the road when the sale of the property is completed. Most agents want the commission sooner than later.

Is there difference between a Lease Option and a Lease Purchase?

No, there is no difference. When an experienced real estate agent talks about a Lease Option or Lease Purchase they are talking about an arrangement between the seller and the buyer that contains both a Lease Contract with an option to purchase contract.

Who is responsible for the property insurance on a Rent to Own/Lease Purchase contract?

During the Rent to Own/Lease Purchase period the insurance on the home is paid by the owner of the home. The buyer/tenant should have renter's insurance until they take ownership of the property.

Who pays the taxes on a Rent to Own/Lease Purchase contract?

The person whose name is on the deed is responsible for the taxes. The seller/landlord maintains all of the tax benefits until the property is sold to the buyer/tenant.