Rent to Own Homes...good idea?
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My fiance and I are contemplating whether buying a home or renting-to-own one, is a better idea. Currently I am 4 months pregnant and we wont to have something established by time the baby gets here. As a former loan officer I dont really know of too many people who can go through the process of getting a home that fast, especially not with credit like ours, lol. That being said, do u think it would be a better idea to try a "rent-to-own" home, where we wont have to worry about bank loans, ect? If we find a home over the next year we can always just move, considering the acutal RENT for the rent2own homes in our area are around the same or LESS than actually renting a condo or some homes? What do u think?
Rent to Own Homes...good idea?rent to own homes work like this. First you put down a non-refundable deposit that goes toward the purchase of the home. If you dont buy, you dont get it back. Now lets say the market rent in your area is 1000 per month. You will pay 1200 or 1300 per month for your home with maybe a few hundred being put toward the downpayment. (some rent-2-owners dont do this though and you just get market rent with nothing going toward DP)
The price of the home should be negotiated first and is usually above market price. (If homes are 100,000 in your area, then the owner might ask for 110,000) This all varies depending on how long the lease is going to be, but most do 2 or 3 years.
Now becareful because some rip-off artists will no set the price and then just tell you "Oh i'll give it to you at whatever market price is in 2 years" This sounds good to some people, but I know a woman this happened to in las vegas right before the boom and the house she was in went up in value 100,000 dollars. Guess who gets that equity and now cant afford to buy the home in 2 years because its too expensive. Thats right, the owner is now going to kick out the woman after the lease is up since she wont be able to pay that extra 100,000 dollars on the house. (this of course is a rare that a house goes up in value like this, but we all know las vegas had that 50% just in value in 2004 for just that one year.) So get a set price. However long a lease you get find out the market value of the home and add 4% for each year you get a contract to lease it. Thats a fair offer. Also remember we are in a decline right now, and I expect prices to keep going down until about 2009 which is when i believe we will be back on a normal housing appeciation cycle again.
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