Home Ownership And The Foreclosure Crisis

996 Words Dec 15th, 2014 4 Pages
Many families lost their homes to foreclosure during the recent economic downturn in the US economy. These former homeowners became renters as the national home ownership rate dropped. Many families felt that home ownership would remain out of their reach due to previous foreclosure history. In addition, losing your home and transitioning to renting is tough on your psyche. However, as rental rates continue to increase and the economy recovers these same families now see possibilities of home ownership again. The housing market has characterized the buyers as “Boomerang Buyers”.Approximately 5 million people lost their homes to foreclosure or short sale and become potential boomerang buyers. Quietly, by buying homes again, these buyers are assisting in the economic recovery.
There are several opportunities for Boomerang Buyers. One option is Rent-to-Own also called Lease Purchase, with this option the buyer rents from the owner for a set period of time, after which the buyer agrees to purchase the property. Typically, the Rent-to-Own option includes an “option fee”, which is a percentage of the home’s value, generally 2.5-7%. In addition, rent credits may also be paid each month. The rent credits are agreed upon by the landlord and the tenant. By comparing rent for other properties a fair monthly rental amount is negotiated by the tenant and landlord. When the tenant is entering into a Lease Purchase situation and would like to own the home at the end of the…

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