“Rent to own” is also known as rental-purchase. It is a legal transaction where onehas the option of choosing a piece of theirproperty such as appliances, home furniture, electronics, etc. and they can lease it in exchange for a weekly or monthly payment. What makes this kind of interesting at some point is that the individuals renting the place or the itemhave the option of eventually buying that specific property. In the traditional lease, we don’t have this option or rightso it offers the costumer a different kind of solution in order to benefit both parties especially those unfortunate people who have gone through foreclosure.
Going through foreclosure is a nightmare for people who have their home as their only assets. Looking for a solution
…show more content…
In most cases, these rents to own homes will only be offered to homebuyers or investors with good or excellent credit scores. Certain lenders may choose this option to avoid placing the home up for sale. The fees and rent credit are non-refundable, so it is the person renting the place who gets to decide whether or not to buy the property. After the lease ends, the landlord is still able to benefit from this. One of the good things about “rent to own” is that the tenants take a better care of the rental because at the end of the day, they have the option of deciding whether they would like to stay with that specific home. And they would obviously not want to ruin their own potential …show more content…
In the Hispanic community, this is very common because most of the people that live in that specific community don’t have a good income or good jobsbecause of the fact that they lack important skills such as the ability to speak the English language. Because of this reason, they have to do these kinds of deals in order tonot potentially lose their properties.Once they are in the business, by a period of time their credit will be improved so the work range may be wider.For people who have gone through foreclosure, it is a good deal because they are able to benefit from
Some people might think that renting and owning are pretty similar, but they do have a lot of differences that people tend not to think about. In fact most people don’t do a lot of research on the differences and similarities. Renting a place to live is a wiser choice and is cheaper in the long run, but having a place that you own has a lot of advantages to. Some differences that people don’t think about are maintenance, utilities, and restrictions.
An alternative would be for lenders to add a true customer service department which is not based on pay or get out, but is counseling based to keep Americans in the American Dream of home ownership. This would not only keep their customers for future business with new home loans, but would be noticed by neighbors and the community who are appreciative their home values are not decreasing. The lenders would counsel them through the sale by assisting them with getting the most they can for their home. By getting local community organizations involved to help with home repairs and curb appeal. Once the home is market ready and a dollar amount has been reached for these repairs the home owner will have to volunteer time and/or resources to assist another person going through the same situation. This would not only help the homeowner but will keep homes in the area selling at a fair market value and not bring down the values in their neighborhood. The assistance provided by the lenders and assistance from the community will help build their self confidence and make them feel like they are not alone.
There are some programs to help such as the Federal Housing Administration that gives people a second chance with a foreclosure or short sale of a home. Low interest rates and low down payments, it gives people another chance to become a homeowner again. The potential buyer still needs to cleanup their credit to make themselves worthy of another chance. Many of the former owners are renting, but still have desires and hopes of getting back into a home soon. This helps the housing market from the boomerang buyers, because they are moving out of rental units and back into homes.
Foreclosure has become an outbreak affecting the entire United States of America. Realtytrac just reported in the month of April 2011 that one in every 593 housing units received a foreclosure filing. (N1) That statistic is for just one month! Some states such as Arizona, California, Florida, Michigan and Nevada continue to be plagued with an influx of homes falling victim to foreclosure or some other form of default. Each home that is a casualty to a foreclosure, short sale or even bankruptcy was collateral for the lender holding the promissory note. The consequences tend to come at a cost for the lender selling the property but a deal for the buying investor. The costs incurred and the losses experienced by the
I often used to watch a show called “Extreme Makeover” where a team of builders would come to a neighborhood, build a need worthy family a beautiful new home, and then just give it to them. “Wow! What a lucky family,” I would say. “How fortunate.” However, as time went by, that same family would be in the news again. Why? The house was in foreclosure. The people had gone to the bank and taken out a mortgage against the home, then spent all the money they got for it on other things.
“short sales,” giving up their homes to moneylenders for a mere fraction of their actual worth.
Renting to own is a viable option for many financially-stricken Americans by eliminating the high costs of down-payments. Renting to own allows the seller to lock in a sale price while renting to another party, usually a small amount higher than a mortgage, but it allows the buyer to rent the house under contract until ready to purchase. The process keeps the seller from paying multiple mortgages without income, and it benefits the buyer by giving a viable alternative for home ownership instead of traditional
In these days of economic upheaval, rising unemployment, increasing bankruptcies, and car and credit card loan defaults, perhaps nothing is more frightening than the rising rates of home foreclosures. Owning a home has long been considered the cornerstone of the Great American Dream, and now for many that dream has turned into a nightmare, from which there seems no escape. The combination of predatory lending practices and consumers who have for to long lived beyond their means has created an escalating problem. Unfortunately, there are no easy answers.
Foreclosure in the last couple years has become a well-known word to a lot of young people, and has become more frequent in the last couple of years. My family has gone through the process and it was a very emotional time for us all. The only home my family was able to get into was one that could be rented with the option to buy. Having more homes in the market that have that option makes it not only more convenient, but more affordable for families like mine who have gone through foreclosure.
With no other option, poor credit, no money for a down payment, these people were left to find rentals. This may have been a good temporary solution, but with rents increasing to levels higher than most mortgage payments, it is quickly becoming less and less attractive. Not to mention that this group of previous home owners has had a taste of what it feels like to own their own home, and they don’t want to give up the hope of having that again.
First of all, the rent to own option is a superb option that allows the renters to apply the monthly rent to the purchase of the house. Renting to own, otherwise known as a lease-option, allow those people that are not in the
The primary difficulty facing “Boomerang Buyers” is the bad credit that is haunting them. The best way to get out from under that cloud that follows them is to demonstrate good financial sense. A rental option is a good tool for this. You can negotiate rates and lengths of contracts to fit with what the “Boomerang Buyer” can comfortably agree to. The downside of this traditional arrangement is that at the end of the rental period there is nothing other than improved credit ratings to show for the money expended. A rent-to-own option on the other hand sits in the middle between a pure rental and a pure mortgage. You can negotiate your rental rates and contract terms like with a rental property but a portion of the monthly payments is turning into a potential asset if financial circumstances still hold positive over the period of the contract. The other benefit to the “Boomerang Buyer” is that as long as they have not over contracted themselves for rent they can walk away from the investment without suffering legal action and credit consequences.
Renting does have a cheaper startup cost. Landlords want their renters to pay a security deposit which is the first and last months’ rent. Landlords charge a security deposit to cover any cost for repairs and cleaning if the renter damages the home once they move out. Buying a home does require a down payment which can be anywhere from 3% to 20% of the house price. The down payment will depend on what
Renting is typically less expensive overall than owning a home. First, it does not require a substantial down payment, though it often requires a security deposit equal to 1-3 month's rent. Also, renters are not responsible for property taxes and repairs on the home, as homeowners are. Monthly rent is often cheaper than monthly mortgage payment, depending on the home and the property being rented.
* The results of a low rental yield on the property for the landlord is that they may only be able to borrow a relatively low loan to value because of the limitation on rental cover placed on lending by many buy-to-let mortgage