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Rent To Own As A Path To Home Ownership

Aug 17, 2007
The traditional method of buying a home is putting 20% down, after qualifying for a mortgage from a reputable financial institution. It also includes meeting the bill of a perfect to premium credit rating.

The traditional method works great for those who have all the requirements to fulfill their dreams of home ownership.

But, what happens if you've hurt your credit rating as a result of divorce, medical bills or slow payment?

Does it mean you are destined to life as a renter?

It doesn't have to be that way if you are aware of how one can Rent To Own a home and rebuild their credit at the same time.

The Rent To Own option also doesn't require a whooping 20% down, perfect or premium credit rating or a stamp of approval from a banking institution.

So, what does Rent To Own require and why would someone consider the option to Rent To Own to become a homeowner?

What Rent To Own requires:

1. Is that you want to own a home ... over being a renter?

2. You are capable of paying your monthly payment on time every month. This is a critical step as it allows one to season the loan in their name.

It's important that you understand the importance of seasoning the loan with you as the payer of that loan month after month.

So, what exactly is seasoning a loan?

Seasoning is an important step because what it provides is that through one's monthly payments on the home they will be contracting to purchase through Rent To Own, they make those monthly payments in their name, which is termed Seasoning The Loan... At the same time, a professional Mortgage Broker is guiding them along the path to ensure that they fully qualify for a loan within 12-24 months based on their making timely monthly payments on the home, while living in the home with a contract with the Option To Purchase the home within the 12-24 months, or whatever terms are agreed upon by the seller and buyer.

It is important that you understand that you will have the option to purchase the home within the 12-24 months or agreed upon time frame.

This means that one can change their mind and decide not to purchase the home (choose not to Exercise The Option), within the 12-24 months and choose to move out and move on with their life.

Who would consider Rent To Own as a path to home ownership?

1. Someone who has found out they have to relocate because their job has transferred. (A Rent To Own offers someone who has to relocate the option to move into a home with a limited amount of money, known as option consideration money, which will be applied to the sale price of the home if the buyer decides to exercise their option to purchase and close on the home in the next, normally 12-24 months.)

2. Another situation that would benefit from a Rent To Own as a path to home ownership is a person or couple who want to purchase a home but haven't managed to save up the 20% down required by a banking institution.

This person or persons may have very little credit or a slightly unfavorable credit rating, which would prevent them from immediately qualifying for a bank institution home loan.

3. The Rent To Own path can also be a path for someone who has gone through a bankruptcy. Yes, it is possible to acquire a home through the Rent To Own path if you've gone through a bankruptcy.

The Rent To Own path to home ownership is as implied, meaning you have the right to exercise your option to purchase the home at the agreed upon price within the time frame agreed upon... but you don't have to exercise your option to purchase the home.

It is equally important to know the terminology of Rent To Own, also known as Lease Option, Lease Option To Purchase, Lease Option To Buy and in some situations (OWC) Owner Will Carry...

There are also words and phrases that signal the opportunity of a Rent To Own ... Words, such as: No Bank Qualifying; No Credit Qualifying; Rent Credit; Creative Financing, etc.

So ... what a Rent To Own offers is a path to home ownership over a lifetime as a renter.

There are many other Rent To Own arrangements to home ownership, which are agreed upon by the parties entering into the Rent To Own agreement.

Rent To Own is far from a one size fits all and opens up an array of creative terms and conditions that satisfy both the Seller and the Buyer. (And that Rent To Own Buyer can be you.)
About the Author
Ven Wheatley is a San Francisco Bay Area Real Estate Investor offering creative solutions to home ownership.
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