If you are in the difficult situation of falling behind on your mortgage payments and trying to sell your home, offering it on a rent-to-own basis may help you stay out of foreclosure. I wish I could say for certain, because I hate to see people lose their homes to the bank, but obviously it’s no guarantee. The last thing lenders want right now is to foreclose on your home. They have gotten pretty flexible in working with homeowners to find solutions. Be sure to include them in the process when trying to find a resolution. As you read on you can evaluate whether you think selling your home as a rent-to-own will help you. Critical factors to consider are:

• Monthly Payment Adjusting Up? If your monthly payment has adjusted upwards, will you be able to rent your home to a tenant-buyer for enough to cover the new payment? If not, you will have to cover the difference yourself or get the lender to agree to a reduced payment. There are lenders that will work with you on your interest rate. This is called a loan modification. They usually won’t change your balance but they might change the interest rate and length of loan. Talk to your lender to discuss your options.

• Home Prices Dropping? Do you live in one of the areas where home prices have dropped dramatically? If so, is your home worth much less than your current loan amount? If this is the case you won’t be able to sell it to a tenant-buyer for enough to pay off your mortgage. Do you have the extra money to pay off the difference? Do you need to consider foreclosure? Maybe a short sale is your solution versus a rent-to-own. A short sale is when you get your mortgage company to accept a lesser amount on the payoff of your mortgage than you owe, when you sell your home. This is called “shorting” the mortgage. Many people and lenders have had to consider this alternative with the housing market decline.

• Behind on Your Payments? How much are you currently behind in payments? You will need to bring them current one way or another to stop the foreclosure. The option fee from your tenant-buyer may be enough to cover this. If it isn’t, you might be able to use the option fee to cover part of it and then establish a catch-up plan with your lender.

Yes, you do have choices other than the traditional way of selling your home! Obviously this is the part where I sing the praises of rent-to-own.

Want to learn more about selling your home as a rent to own?  See Wendy Patton’s book, Rent to Sell, Your Hands on Guide to Sell Your Home When Buyers Are Scarce.

Let's face it, as a rent to own investor having a good credit repair company on your team is a must.  The vast majority of tenant-buyers NEED to improve their credit before they can qualify for a mortgage.  Especially in today's mortgage climate.

Another important reality is that we as a rent to own investor cannot leave credit repair up to the rent to own buyer.  If you simply tell them to improve their credit so they can buy at the end of the option period what do you think will happen?  Nothing.  They'll never get around to it.  Mostly, despite their good intentions, it will be because they don't know what to do.

With as many years as I've been doing lease option or rent to own investing deals I still don't know everything there is to know about credit repair.  I hosted a webinar recently with a credit repair specialist and I learned a lot!  One of the reasons I don't know everything is because credit repair changes.  Instead of trying to have to constantly stay on top of all the changes and then coach my rent to own buyers through every step I find it to me much easier, much less time consuming to simply require them to enroll in a credit repair program at the onset of the option period.  If it becomes a requirement you are going to have a much higher success rate.  And they'll thank you for it!  Rent to own buyers will be grateful because you helped them get through the steps they needed to homeownership.

If you want to learn more about credit repair, watch the webinar I was talking about.  Also if you are looking for a reputable, quality credit repair company (because, trust me, not all of them are) - I recommend www.renttoowncreditrepair.com