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05 April 2014 @ 12:33 pm
Rent to Own?  
We're looking into buying a house, but I'm not sure we're going to qualify for a mortgage. I mean, we probably will, but I'm not sure. I'm calling a mortgage broker on Monday. But in the meantime I'm overthinking things and looking at options. Does anyone have experience with rent to own? The house we're thinking we'd put an offer on has been a rental in the past, and it's been on the market for quite some time. The current renters are moving out, though, and I'm wondering if this would be a good opprotunity for us. Mostly I'm just scared of buying a house, even though I really like this one.
Current Mood: nervousnervous
LMF-AOredfield79 on April 5th, 2014 07:55 pm (UTC)
Don't do it. I'm on my phone but they're not good in the long run and there are other reasons too i can try to find done links when i get to computer
.hellfire82 on April 5th, 2014 09:15 pm (UTC)
I don't think they are very good ideas. You generally end up paying more over time than you would for a straight up mortgage; if you fall behind on your rent, then you are SOL (depending on how the contract is worded); you don't get the mortgage deduction; you don't have any equity in the house.

Perhaps consider buying some land and building a tiny house? Those cute two story storage buildings at Home Depot can be converted into a small home that will provide shelter until you can afford a more traditional home (I am assuming it's just you and your significant other; not sure how well that would work for people with kids).

Bubblesbeezelbubbles on April 6th, 2014 11:25 pm (UTC)
Nope, it's us, our nearly 6 year old and three cats. Probably not a doable solution. A neat idea, though.
.hellfire82 on April 9th, 2014 03:10 am (UTC)
I reeeeally want to do it. It's us, 2 cats, and a puppy. The other half doesn't think it's feasible though, because we would have to insulate it, finish it, and put in the plumbing and electrical stuff. I think it's more doable than he believes it is, but that could be because I'm slowly going nuts because I live with AND work with my mom.
runonthesunrunonthesun on April 5th, 2014 10:12 pm (UTC)
I've done this. Twice. I recommend it only if you live in the house for a few years before deciding you want to buy it and thus become familiar with what needs to be fixed. Previous rentals are maintenance nightmares. The only advantage is generally knowing what you are getting into and potentially saving agent costs, the cost of moving, and potentially getting a further discount based on your knowledge of what is broken.
Sammy: melibwitch on April 5th, 2014 10:54 pm (UTC)
My parents set up a rent to own contract at their renters request because their renters wanted the house and couldn't qualify for a mortgage. It really is frankly a win/win for the landowner: my parents were reasonable as these things go. The rent was based on what a mortgage was cost; my parents still did the upkeep that they were legally obligated to do as landlords; and they reported the tenants rental payments (somehow, I have no idea how) to credit agencies.

The tenants had to follow the lease and pay the taxes on time, and if not, they would evicted and be out all those payments. In the end it worked out - the tenants got a full mortgage as soon as they could to buy the house at the agreed upon selling price, but to think about everything that could have gone wrong in the meantime.
Nawilla: H&Onawilla on April 5th, 2014 10:59 pm (UTC)
If you can't get a mortgage now, you probably won't be able to get one in a year or however long you plan on 'renting to own.'

I wouldn't do it. Why pay a premium on a rental property you are unlikely to ever own?
Bubblesbeezelbubbles on April 6th, 2014 11:28 pm (UTC)
I actually think we'll probably be approved. And if we aren't we would be in a year. Our credit is good now, we have some money available for a downpayment, and my husband is starting a new career with a fairly decent salary that's pretty much double what he's making now. I'm just a big worrywart and like to plan for the worst case scenario and explore options.
Jessicahappy_just_2_be on April 6th, 2014 01:12 am (UTC)
Something I learned working for a home builder..... Lease with option to buy at the end of a contract term is better. They can have you put down a larger down payment or something, but if worded right and you or them back out you can still get that back. Then you could have the option of renting for a year with a locked in price at the end to purchase if you decide to.
Bubblesbeezelbubbles on April 6th, 2014 11:30 pm (UTC)
I think this is more what I was thinking. A sort of deal where we rent for a year, and then if we decide to buy the rent goes towards our downpayment. I just don't know where to start looking with regards to this sort of stuff.