Advantages of Rent to Own Homes for Buyers
Getting a mortgage is never fun, but it can be especially challenging when the underwriting guidelines are as tight as they are right down. I’ve spoken with people who have 40% to put down that are being turned down for home loans. If you would like to purchase a home, but cannot get a mortgage, you may be considering alternative options. Many people are turning to a rent to own home as an alternative to a traditional purchase. Let’s look at some key benefits that rent to own homes have for buyers.
Minimum Cash Out of Pocket
Once upon a time, just about anyone could get a home loan with 100% financing. In today’s market, even those with perfect credit are having to put a significant amount of cash down. With FHA changing their guidelines and raising the MIP costs, it has never been more expensive to get into a home.
You will pay an option fee with houses for rent to own, but this fee will be significantly less that what you would have paid with a traditional mortgage. The option fee will typically be just 2% or 3% of the purchase price.
Bad Credit Ok
When you shop for a rent to own home, you don’t have to worry about being turned down because your credit situation is less than ideal. Rent to own deals are intended to help people who have bad credit so your credit situation will not stand in the way of you getting the home of your dreams!
Equity Growth Starts Now!
Properly structured, rent to own transactions can be a smart financial decision. Unlike when you throw money away on rent, you start building equity from the very beginning. In fact, in most contract structures your equity will build faster than if you had a mortgage. Not only do you participate in any appreciation that occurs, but a portion of each monthly payment will go towards the purchase price. This rent credit means that you may not have to put additional cash down when it comes time to get a mortgage.
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