While most other buyerse are drowning in the “Credit Crunch”, you have a choice.  Renting-to-own can allow you to buy your next home, even at a time when financing is so hard to obtain; but that’s not the only advantage it offers.  Let’s take a look at some of the reasons why rent-to-own can be beneficial for you:

1. Flexibility.      This is key.  If you live in an uncertain market, you have the ability to get into your home now and still have the flexibility whether or not you want to buy.  For most of you, buying is what you truly want and should plan for.  Not buying is your “get out of jail card” if things don’t go well for you personally.  Don’t go into a rent-to-own without being serious about purchasing the home.

2. Time.              The rental period gives you time to improve your credit score and pay off some other debts or save more towards a larger down payment.  It’s very important to take advantage of this time by taking the proper steps.  We will discuss credit repair in more detail later in the book.

3. Option Credits.          One imporant negotiating point is having all or part of your monthly rental payment count as a credit against the final purchase price.  This is called an Option Credit, and it can be an excellent way to increase your down payment and equity in your new home.  For instance, if the rental payment is $1,200 per month and $600 of that gets applied towards buying the home (your option credit), you will build up $7,200 of equity for one year ($600 X 12 = $7,200).  This will be covered in much more detail later in this book.

4. Sweat Equity.                        If you are a handyman and want to buy a fixer-upper home on a rent-to-own basis, you can build Sweat Equity in the home by making improvements while you are a renter.  Once you purchase the home, these improvements will increase the appraised value of the home in comparison to your contracted purchase price.  Having an equity spread (the home is worth more than you are buyng it for) can be very helpful when you are obtaining financing.  You will also want to consider asking the seller for option credits if you do certain repairs.  For instance, if a repair is worth $3,000 but you can do it for $800, consider asking for a $3,000 credit from the seller.  This would give you $2,200 in real value for your work, or sweat equity.

Wendy’s Wisdom: Buying a rent-to-own home offers a lot of benefits to you: Flexibility, the ability to live in the home before you buy it, being able to accumulate a down payment while you live in the home and much more!

 

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending Is Tight, Chapter 1, Pages 17-18.

While you are looking at homes and once you make an offer on a home, there are some questions you should be asking yourself to help keep common sense involved in the decision making process:

1) Does the home work for you and does it meet your NEEDS?

*Remember the difference between wants and needs?

2) Do the numbers work for you?

*Can you reall afford this home?

3) What sacrifices are you making to get this home?

*It helps to think specifically about what you might be giving up for this particular home.

4) Will the home meet your needs for the near future?

*Will your family be growing?  Are the kids going away to college?

*Will you still want to mow that big back yard in a few years?

If you know that you are the type of person who easily becomes emotional in your decision making process, it might be a good idea to carry a note card with these four questions on it to remind you while are looking!

Wendy’s Wisdom: Remember to strike a balance between emotions and common sense in your home buying process.  It will help you enjoy your home that much more once you actually move in.

 

 

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending Is Tight, Chapter 3, Pages 51-52.