All Rent To Own Home Programs supposed to create a win-win plan between home buyers and sellers, unfortunately this is NOT always the case.
There are some Rent to Own companies which focus more on their own benefits without looking after the home buyers which causes them to be trapped in the program. If you were thinking of getting into Rent To Own Home, you would definitely want to make sure you don’t fall into these traps. Falling into any of these traps can be a serious setback to your goal to home ownership.
Here are the 3 Most Common Rent To Own Home Traps:
1. Heavily Overpriced House
- Some of the house prices were set so much higher than market price and this prevents you from getting the mortgage at the end of the contract.
- For example, if you got out of contract within a year compared to 2 years, the rent to own home companies’ profit will drop significantly. Therefore, this will prompt them to protect their profit by setting a high purchase price. So even if you got out early, they will be guaranteed of a fat profit.
- At the end of the contract period, if the appraisal didn’t come out close to your purchase price, you will have trouble getting the mortgage you need in order to purchase the house and this will risk losing your down payment and accumulated rent credit.
2. Over-Committed with your weekly repayment.
- This is the primary reason why people fail for all home ownership.
- Stretching your budget more than what you can afford is not wise move for any home buyers.
- Fail to keep up with the payment, and you will be faced with the risk of losing the
3. Short Contract Period.
- One of the goal of rent to own home program is to help home buyer to get mortgage at the end of the contract.
- You really want to make sure you have enough time to overcome whatever the obstacle that was preventing you from getting the mortgage in the first place.
- If the contact period is less than 2 years, you most likely stretching it as it takes time to fix any of these problems
1. Saving enough deposit.
2. Fixing any credit issue in your report.
3. Building good track record of income and saving
How To Avoid These Traps?
1. Find Out the Real Market Price.
- Understanding the value of homes in the area.
- Inspect at least 3 similar properties in the area.
- Talk to the local real estate agent who can show you the values of comparable homes sales.
2. Understand your Finances
- Calculate your affordability or budget by using Mortgage Affordability Calculator.
- Stay within your budget based on what you calculated.
- If anyone pressures you to stretch beyond what you can afford, consider not to proceed.
3. Make you get the a Long contract period, just in case you can’t get finance from the bank.
- Having contract period long enough to get to the point where you can get the mortgage from the bank.
- Talk to credit repair companies and Mortgage Brokers and estimate how long you actually need to fix your credit issues.
- Ask for the option to extend your contract period as well, just in case you need more than what you expected.
Find the Right Rent To Own Home Program
Although Rent To Own Home program can help you to get into the home ownership quicker, there are a number of possible traps that you can fall into along the way. I hope this blog can help to you to find the right one, prevent you from falling into some of the traps and move you closer on your path of home ownership.
Lastly, please leave your comment and feedback. If you have any suggestion on my next topic, please let me know, I love to hear from you.
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