Pursuing Homes For Rent To Own
People pursue homes for the rent-to-own option for all different reasons. Most renters suffer poor credit as a result of divorce, unforeseen health bills, employment loss or bankruptcy. Other renters may be senior citizens or first time home buyers who lack the ability to save up the initial down payment.
Given the number of houses sitting on the market for six months or longer, many sellers are transforming their homes into temporary rentals to facilitate market needs. Many people can bounce back from their current state of crisis if given 1 to 3 years, which is exactly what homes in the rent-to-buy category can do.
For homes that will be purchased eventually, the home inspection is an important part of the equation. Homes for rent run the gamut from brand new homes that are the victims of an ailing market, to shoddy shacks that would otherwise never sell.
A home inspection company may charge between $200 and $500, so renters usually wait until the end of the option period nears. The inspector will make sure the structure is sound, the plumbing isn’t leaky and there are no major thousand-dollar defects. If a defect is discovered, then the renter may decide to walk away entirely, or he or she can negotiate repairs or a better price.
Homes for the rent-to-buy option can be found virtually anywhere in the United States, although some markets are better than others. For instance, Denver real estate has become a burgeoning market for rental homes. Lori Jake from SwiftCurrent Investment Group says she manages eighty rent-to-own properties in the area.
Renters pay an upfront, nonrefundable 3% option fee, as well as $50 to $100 above market-value rents. Some renters skip the option fee and pay an extra $150 to $200 each month instead. Their market is looking for serious home buyer prospects. Credit expert Terry Greene adds that home owners may actually save money, despite the initially higher prices, if they can improve their credit scores during the option period and gain approval for a lower rate on their mortgage.
For instance, on a $300,000 house, a low credit score (500-579) would result in someone paying $972,720 due to high interest rates. By contrast, someone with good credit (760+) will pay just $614,520. Therefore, timing is key in any search for homes.
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