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    Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit
    Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit
    Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit
    Ebook241 pages3 hours

    Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit

    By Wendy Patton

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    About this ebook

    A step by step guide to buying your dream home NOW without a mortgage using the rent-to-own method while rebuilding your credit. The entire rent-to-own process is covered explaining key fundamentals including:

    - How to find your dream home NOW
    - How you can save thousands of dollars on your purchase
    - Dozens of ideas to help you rebuild your credit along the way
    - How to keep from making costly mistakes
    - Understanding the paperwork
    - Pitfalls to avoid
    - How to Make an offer and handle negotiations
    - How to qualify for financing of the final purchase
    - Numerous tips to make sure things go smoothly
    - Ways to add peace of mind/reduce stress during the process
    LanguageEnglish
    PublishereBookIt.com
    Release dateApr 26, 2016
    ISBN9781456623067
    Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit

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      Book preview

      Rent-to-Own - Wendy Patton

      review.

      DEDICATION

      This book is dedicated to all of the buyers in North America that want to buy their first home or next home, but just can’t do it. Unfortunately, the mortgage industry has changed along with the economy. It is affecting and squeezing everyone in our country. I congratulate you for picking up this book and researching how you can be a home owner in the near future. Home ownership is within your reach if you really want it.

      I want to give special thanks to so many people that helped me with this book. Kathleen Woodward, Thanks for helping rewrite this book! To my husband, Michael, who has to put up without me during the years I spent writing books. I appreciate you so much.

      To Your Success

      Wendy Patton

      INTRODUCTION

      Let me paint a picture for you. You either owned a home previously or you are a first time buyer. If you owned a home previously you might have lost it to foreclosure, shortsale, either due to a job loss, divorce or your mortgage rate adjusting upwards.

      Now is the time to buy! For most of us, home ownership is our single, biggest source of wealth. It not only puts a roof over our heads that we can call our own, but it also builds security for our futures by paying down the mortgage and building up equity. For most people, their home is their single greatest asset.

      Probably the first thing you did was to start looking on the Internet or checking the local newspaper for homes for sale. After that, you called a Realtor® and he told you that he would love to help you, but you needed to get approved for a mortgage first. Ugh…you know you don’t have the best of credit and you are not sure if you should even call a mortgage lender.

      You decide to make the call to a mortgage lender. You know what the outcome will most likely be in advance, because of your financial situation, but you do it anyway. After gathering tons of information from you all the way down to how many times a week you floss, he finally tells you that based on your current credit, income, down payment, inadequate amount of time spent brushing after meals, etc. you aren’t currently qualified to get a mortgage. Well, duh! You could have told him that in the first place. Do not despair.

      Whether you owned a home before that was foreclosed on, you were a renter or you are a first-time buyer, chances are if you are reading this you have already experienced the above scenario, or at least something close to it.

      The problem is that at the same time, rents are high in many areas of the country as the demand for rentals has increased. How much money do you want to continue forking over each month in rent only to pay the landlord’s mortgage? You want to BUY a home. That’s why you’ve been looking, and why you are reading this book.

      Most people would give up here, despite the increasing rents. After all, if you can’t get a mortgage, you can’t buy a home, right? But we both know you aren’t most people. You have taken the step to educate yourself by buying this book. The banks want you to forget that there are ways to buy homes other than just getting a mortgage – you DO have options. Heck, even if you CAN qualify for a mortgage right now, you might be looking for another option just to give yourself some leeway in this difficult housing market. This book is all about giving you another option, a way to get into your new home now, even if you can’t qualify for the loan yet.

      What this is, of course, is a guide for buying your next home without having to have a mortgage right away, without having to have perfect credit and without having to have a large down payment. This is a guide to a creative home buying technique known as rent-to-own or lease-option.

      You might be thinking that because you can’t qualify for a mortgage right now you will only be able to get a rent-to-own home from the most desperate sellers with the ugliest, most over-priced house. While it’s true that those are going to be some of the homes available on a rent-to-own basis, you’ll be happy to know that they are far from being the only ones. It’s also possible to buy homes in excellent condition, even fully renovated homes or new construction, on a rent-to-own basis - and still pay fair market price! Remember, it’s a buyer’s market in most of the country and that’s going to help offset the fact that you can’t qualify for a mortgage right now.

      As I said, renting to own has become a little less commonplace, but it’s time to dust it off and put it back into mainstream practice. In the upcoming chapters I will teach you what rent-to-own is, how it works and lots of other tips and tricks for buying your next home without qualifying for a mortgage or having a huge down payment.

      Before we jump into all of the details though, you are probably wondering how hard this is going to be. You are probably wondering if this is something you can do on your own or if buying this book is going to be a big waste of money. Since you’ve been patient enough to read through this whole introduction, I’m going to reward you with that answer. If you happen to have skipped ahead right to the end of the introduction, you sneaky devil you, you’re in luck - you’ll get the answer too…

      Seriously though, I have been doing rent-to-own deals for more than 25 years. That’s right, I was doing them before the bankers convinced all of the sellers that only buyers with conventional loans should get homes. Yes, I still did them while the banks were trying to fulfill their goal of eliminating all renters on the planet by digging themselves into the subprime pit of doom. Fortunately for me, I outlived a lot of these banks. Not only have I been doing rent-to-own transactions through all of this, but I’ve also been teaching others to do them as well. I have taught more than 20,000 people from all walks of life, and I can assure you that I wouldn’t still be teaching if it couldn’t be learned.

      So if you’ve already bought this book, go ahead and get comfortable in your favorite chair, put your feet up and we’ll get started. If you haven’t bought the book yet, but you want to buy your next home, trust me, this book will come in VERY handy. In fact, given the current credit crunch, it just may be the only way you’ll get to buy your home right now. Go ahead and proceed to the cashier and fork over your credit card. You will not regret it!

      To Your Success

      Wendy Patton

      PART 1: WHAT IS RENT-TO-OWN? HOW DOES IT WORK?

      Chapter 1:

      What is Rent-to-Own?

      Before we can look at why we would want to buy a home and how to buy a home on a rent-to-own basis, we first need to understand what renting-to-own is. A rent-to-own can also be referred to as a Lease with an Option to Buy, a Lease Option or a Lease to Own. In this book we will call it a Rent-to-Own, but these words can be used interchangeably for the most part.

      In a nutshell, a rent-to-own sale means the seller is allowing you, the future buyer, to live in the home for a while as a renter before you actually purchase the home from them.

      In a rent-to-own transaction, before you move into the seller’s home as a renter, you and the seller would agree on the sale price and other terms. You would pay the seller a nonrefundable option fee. Both you and the seller would sign some paperwork covering the lease, the purchase and the option (which gives you the right to purchase the home at a later date) and in approximately one to three years, depending on your agreement, you have the option of purchasing the home.

      I say you have the option of purchasing the home because it is important to understand that in a rent-to-own transaction you, as the buyer, are not obligated to purchase the home at the end of the rental period. The seller, however, is required to sell it to you should you choose to buy it. That sounds pretty good, doesn’t it?

      In later chapters we will go into great detail about the whole process. Right now I just want you to have a foundation of understanding about renting-to-own. Let’s recap.

      A rent-to-own transaction between you (the tenant-buyer) and a seller is comprised of paperwork and contracts, which include:

      • A Sales Contract containing the price

      • An Option Agreement which contains the time period and option fee amount

      • A rental period agreement

      What you need to remember is that even though you will be signing a Sales Contract, it remains your choice to purchase the home, not an obligation to buy it. You are, however, also guaranteed the right to buy it, if you wish to, and you are financially ready to qualify for the mortgage. An exclusive right to purchase is what your option fee provides for you.

      Why Would I Need to do This Rent-to-Own thing?

      This, of course, brings up two questions:

      1. Why in the world would the seller let me do this?

      2. Why would I need to do this?

      If we take a look at the condition of our current housing market, we’ll find some answers.

      The Realities of our Current Housing Market – Can You Say Slump?

      Let’s face it; throughout much of the country, the real estate market is tough for sellers. Many areas went through a period of real estate insanity that will be looked back on as the Boom years. The Boom years gave us double-digit appreciation rates and home values soared in much of the country. Some areas were so crazy that the appreciation rates were as much as 40% or more in one year. In Miami, Florida, the median selling price of a home in January of 2003 was about $190,000. By January of 2007, the median selling price was $375,000! That’s about 100% appreciation in 4 years, or 25% per year.

      Do you think that appreciation rates of 25% per year are realistic? I’m sure you have heard the saying, What goes up, must come down.

      With home prices surging so rapidly, people were buying them like the Nintendo Wii for Christmas. It was a mad rush to buy. Buyers were frantic to be a part of it because they wanted to capitalize on that crazy appreciation themselves. Those fabulous Boom years were great for Realtors® and sellers; but tough on buyers. A real estate agent could get a listing and start putting the sign out front. Before he finished putting that sign in the ground, a buyer would drive up and start writing a deposit check – without even looking inside. Before that buyer could finish writing the check, another buyer would drive up and start writing a bigger deposit check for more than the asking price. A For Sale sign attracted buyers, almost like dogs when they hear the can opener!

      If a buyer happened to buy early enough, he could take advantage of that great appreciation. If he bought at the top of his market, he had nowhere to go but down.

      The simple fact of the matter is that the staggering appreciation rates that most areas experienced just weren’t sustainable. The real estate market in most areas has not settled back down to mere mortal levels; they’ve dropped below that. Home selling prices in Miami, Florida, between January of 2007 and May of 2008, dropped from a median price of $375,000 to $340,000. By September of 2008, the median selling price dropped to $275,000. That’s more than a $100,000 drop in just over 1½ years! It’s still going down as of the writing of this book.

      Miami is more of an extreme case than most of the country, both going up and coming down, but it does serve as a good example of how things have changed. Markets have changed to heavily favor buyers. That’s why it’s such a good time to buy now. That’s why sellers need to find creative ways to sell their homes, like rent-to-own.

      The problem for sellers is that qualified buyers have become scarce, just like dogs when they find out only a can of green beans was opened, and sellers are popping up everywhere. It seems like For Sale signs on the front lawns are now part of the landscaping that everyone plants when they put in their spring flowers.

      It seems like these signs are everywhere…

      ...these signs are all too scarce!

      For Sale signs seem to be lingering well after the spring flowers have wilted. Whether your market is like Miami and is plummeting or your local market is much more moderate, odds are it’s still much tougher for home sellers to sell now than it was just a couple of years ago. Most of the country is in a housing slump.

      So you’re probably thinking, Great! This makes it an excellent time for me to buy. Prices are low, sellers are competing for buyers, what more could I ask for? All of that is true; however, there is just one teensy-tiny problem. While this housing slump is making it tough for home sellers, there is a balancing factor that’s making it tough for home buyers. I call it the Credit Crunch.

      How the Credit Crunch Affects You – the Buyer

      With the severe tightening of the mortgage lending industry, buyers are having a harder time getting mortgages. The subprime mess we’ve all heard about means that many buyers who could qualify for mortgages before are no longer able to. This may be your situation.

      During the Boom Years, lenders were putting buyers into Adjustable Rate Mortgages, or A.R.M.’s, meaning their interest rate would be adjusting after the introductory period, thereby increasing (possibly decreasing, but not likely) their payment. They did this because the buyer couldn’t qualify for a standard mortgage or even if he could qualify, he couldn’t afford the payment because the interest rate on the 30-year fixed mortgage was so much higher. These adjustable rate mortgages are one type of a subprime loan.

      The lenders reasoned that it was okay to give buyers

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