Friday, 9 August 2013
Rent to own: avoid the traps
Getting yourself into a rent to own situation can benefit you, when you do not have enough down payment and or you have a credit what will take a while to get repaired. It gives you a chance to purchase a property for a set, today price, but pay for it later. If the market will go up, you are the winner.
However you must do a very thorough due diligence or it might will come back to hunt you. Knowledge is gold and you can find some here.
The process is, the vendor and the wanna-be home-owner signs a Lease Agreement with an Option to Purchase, paying rent and some, what will go toward to the down payment. Typically 2-3-5 years within the Tenant has the option to purchase. It is enough time to accumulate plus save some down payment and or repair credit to be able to obtain a mortgage.
A benefit for the landlord is that tenants who have this option most likely will take better care of the property, since they looking forward to become the owners.
Be aware, make sure the person you are dealing with is the real home owner and not a middle-man, whom has a deal with the real vendor and he is just playing it down to you and making profit on your contract. He might of promised the owner a sure sale in case you will not come through. He will charge a fee and than disappears in tin air, leaving all the headaches to the buyer and the vendor. This would be not the first time or the last time when con artists will take unsuspecting people for a ride. Be sure always deal with a reputable lawyer in the transaction or just simply look for the advise of a seasoned mortgage broker.
To avoid traps, here are some suggestions:
· any deposits and or funds you put toward to the purchase price of the home to be well documented and to be held preferably in a lawyers bank account and it should not to be paid to the vendor till the sale takes place and you assure to have a mortgage and will be able to finalize
· look up a good trustworthy mortgage broker, discuss what you are getting into and ask for the help of such to obtain a title, evidencing the owners name and all encumbrances, mortgages on the title and so you will be well informed on all aspect of the property and its owner
· with the help of a mortgage broker, of course you must choose the right broker, who is willing to help you not only with getting into the agreement but securing you a mortgage down the road and also help to repair your credit, make sure your interest will be registered on title. As your mortgage broker for FREE consultation session and if he give you one you might just found yourself a good alliance and trusted advisor with experience in these type of transactions