by VINCENT POLISI on OCTOBER 26, 2009 @ Credit Repair College
One of the questions I get most often from people interested in credit repair, is how they can buy a home when they have bad credit. While it was once easy for just about anyone to get a mortgage, bad credit mortgages are getting hard to come by.
This is a frustrating situation to be in – you want to own your own home more than anything, but tightening lending guidelines and your less than stellar credit history are making this seem like it is out of reach. Few things are more heartbreaking than finding your dream home and seeing someone else buy it.
More and more people who are unable to qualify for conventional financing but have good income have begun look to lease purchase homes to help them achieve their goals.
Choosing a lease purchase option allows you to rent the home for a set period of time. This gives you the ability to move into your dream home now, while you are working towards credit restoration and repair. One of the key benefits of a lease purchase is that the seller can not sell the property to anyone else during the agreed upon time.
A lease purchase contract, unlike a rent to own or lease option contract, requires that you purchase the home at the end of the period defined in the contract. You are legally bound to buy the home and can be sued if you fail to perform.
For this reason, it is imperative that you take aggressive action towards credit repair as soon as you sign a lease purchase agreement. A key step that you should take before you sign a lease purchase contract is to speak with a lender and have a clear understanding as to what it will take to qualify for a mortgage loan.
If you aren’t 100% sure that you can raise your credit score, or you are concerned that you might change you mind about owning the home, a lease option or rent to own home might be a better choice for you. These provide more flexibility than a lease option purchase. In both of these instances, you can change your mind about purchasing the home and the only negative consequence will be loosing your initial deposit money.
A Lease to purchase transaction, as well as a lease option or rent to own, will typically require a deposit some where between 2% and 5%. You will also have to pay the first months rent payment prior to moving into your home. It is important to note that the option money typically does not apply towards the purchase price of the home, though some lenders may allow it to be credited towards the down payment. You should also understand that in all types of transactions, option money is not refundable.
A portion of your monthly lease purchase payment will consist of what is called a rent credit. This is the amount that you are paying over and above market rent that will be credited to the purchase price of the home. The amount should be clearly defined in your lease purchase contract. The advantage of this is that your rent credit can help you get into the home with little or no cash down when it comes time to qualify for a mortgage.
With the changing market, lease purchase houses are becoming a viable option for people from all walks of life. From self employed individuals who need time to document their income to those looking for time to improve their credit, they are a great way to take immediate action towards your goals.
Tuesday, October 27, 2009
Tuesday, October 13, 2009
Rent To Own! (From Dollarrent.equitylinesite.com)
One of the best ways to buy a property at a rate that is not influenced by market trends do not get a rent-to-Own option.
About Rent To Own?
Ie rent-to-Own, is a situation where you can buy real estate at a future date, based on a specific value in the agreement and in the meantime, you live on a rental property. Other terms, which relate this form of purchase order, lease-purchase option or an annuity to be purchasedOptions
What is a part of the rent-to-Own Convention
The Rent To Own is composed of two parts. One section contains the lease terms and the other part has the option to buy.
The leasing section defines functions such as rent, the period of lease, the time to pay the amount, and so on. In the purchase section, you can acquire more information about the possibility of the property to see mentioned, at some point in the future, in addition to thePrice.
What aspect you should know about a rent-to-Own agreement?
Are in a rent-to-Own agreement, three factors. These are premium rents, fees and rent option credits.
Rent premium is an amount you will need for the prepayment of the property to be paid. It is an amount that is a little more than the rent. Another thing that goes on the down payment, the possibility of a fee. You have to note, however, that the option isYou will not be refunded, should you decide at the last moment that you do not want the property. A rent credit is a part of the rent, which is introduced for the down payment. This is confirmed by the seller who has Down payment each month.
Benefits of Rent To Own
There are many advantages in a hire-purchase situation for both the buyer and seller.
As a buyer, your gain, since the changes in market value has no effect on the price paidfor the property. So, if prices were to rise, you need not pay more, just the same amount that was proposed in the agreement.
They contribute to the rent payments by premiums, fees and rent option credits, reducing the amount that you pay at the time of purchase. This is a real advantage for you when the time comes for payment.
Finally, when the last moment, you do not choose to buy the property, you are free to do so. There are nobinding option to purchase. Despite all the money is paid on deposits in such cases, a loss for you still, you can unwind with a purchase, you do not feel right in the final minutes as well.
Seller benefit by someone who will look after their property really well, as they will own the property in the future. The seller receives the money not only for the value of the home, but also in the form of rent, which is an additional source of money, until the actualPurchase happens. In case the buyer decides not to buy the property at the end of money made to do by hiring non-refundable option fee award.
A look at the other side of the coin
As someone who should engage in rent-to-own agreement, you are on the other side of this situation and deliberately. As a buyer, you will lose your rent option premium and fees, you should decide to withdraw from the purchase at the end. In the case of the seller, the application of market-basedPrices suddenly rise up, they would be on the losing side, because the price would be set for their property to be significantly lower.
About Rent To Own?
Ie rent-to-Own, is a situation where you can buy real estate at a future date, based on a specific value in the agreement and in the meantime, you live on a rental property. Other terms, which relate this form of purchase order, lease-purchase option or an annuity to be purchasedOptions
What is a part of the rent-to-Own Convention
The Rent To Own is composed of two parts. One section contains the lease terms and the other part has the option to buy.
The leasing section defines functions such as rent, the period of lease, the time to pay the amount, and so on. In the purchase section, you can acquire more information about the possibility of the property to see mentioned, at some point in the future, in addition to thePrice.
What aspect you should know about a rent-to-Own agreement?
Are in a rent-to-Own agreement, three factors. These are premium rents, fees and rent option credits.
Rent premium is an amount you will need for the prepayment of the property to be paid. It is an amount that is a little more than the rent. Another thing that goes on the down payment, the possibility of a fee. You have to note, however, that the option isYou will not be refunded, should you decide at the last moment that you do not want the property. A rent credit is a part of the rent, which is introduced for the down payment. This is confirmed by the seller who has Down payment each month.
Benefits of Rent To Own
There are many advantages in a hire-purchase situation for both the buyer and seller.
As a buyer, your gain, since the changes in market value has no effect on the price paidfor the property. So, if prices were to rise, you need not pay more, just the same amount that was proposed in the agreement.
They contribute to the rent payments by premiums, fees and rent option credits, reducing the amount that you pay at the time of purchase. This is a real advantage for you when the time comes for payment.
Finally, when the last moment, you do not choose to buy the property, you are free to do so. There are nobinding option to purchase. Despite all the money is paid on deposits in such cases, a loss for you still, you can unwind with a purchase, you do not feel right in the final minutes as well.
Seller benefit by someone who will look after their property really well, as they will own the property in the future. The seller receives the money not only for the value of the home, but also in the form of rent, which is an additional source of money, until the actualPurchase happens. In case the buyer decides not to buy the property at the end of money made to do by hiring non-refundable option fee award.
A look at the other side of the coin
As someone who should engage in rent-to-own agreement, you are on the other side of this situation and deliberately. As a buyer, you will lose your rent option premium and fees, you should decide to withdraw from the purchase at the end. In the case of the seller, the application of market-basedPrices suddenly rise up, they would be on the losing side, because the price would be set for their property to be significantly lower.
Friday, October 9, 2009
Use a Lease Option to Lock in Low Home Prices (From Get Rich Slowly)
Use a Lease Option to Lock in Low Home Prices
Thursday, 8th October 2009 (by Baker)
This article is GRS staff writer Adam Baker. In addition to his work at Get Rich Slowly, Baker blogs over at Man Vs. Debt, where he publicly tracks his spending on a daily basis.
Everywhere I turn, people are speculating on whether housing prices have bottomed. While I personally feel things are looking better, I’m never a fan of trying to time markets. Attempting this often encourages people to make large financial decisions before they are fully prepared or informed. Buying homes in haste is one of the factors that got us into our current financial crisis.
Luckily, there may be a silver bullet for those of you who aren’t willing to rush to buy but are still considering a home purchase within the next couple of years. Your solution may take the form of a lease option.
What the heck is a lease option?
The first thing you need to know about lease options is that everything is negotiable. This can quickly turn a set of simple principles into an extremely complex transaction.
Having said that, here are some common features to help you grasp the concept of a lease-option:
* A prospective buyer pays an option fee, which buys the future right to purchase a property within a specified time-frame.
* Unlike a traditional deposit, the option fee is usually not refundable.
* The fee paid for the option (or option fee) can vary widely, but is typically larger than a traditional deposit, and often ranges between 1-3% of the future purchase price.
* The future purchase price is either fixed up front, or a way to determine future market value is established. For example, at the eventual time of purchase, both parties may agree to average two independent appraisals.
* Many contracts will have a length of between one to three years, although this too is flexible.
* Throughout the contract, the buyer leases the property at a pre-set rental rate.
* Some agreements credit a specific portion of the monthly rental rate against the eventual purchase price. This can add legal complications and potentially present problems with mortgage lenders (who all have different guidelines and allowances for this).
Remember the first thing you need to know: everything is negotiable. These are just a few general guidelines to introduce the concept.
Disclaimer: The laws governing lease-option transactions vary greatly from state-to-state. The typical real estate agent does not have the experience or credentials to properly advise on these contracts. Always have an experienced real estate attorney review your unique situation and prepare/review any applicable documents.
The majority of lease options fail miserably
The average lease option and/or rent-to-buy arrangement is destined to fail. There are several reasons for this:
* Desperate landlords — Many times, lease options are used as a last-ditch effort to sell an overpriced property. Owners are either unwilling or unable to move off a certain price, and therefore turn to any technique that has a chance of bringing the desired sale price.
* Desperate tenants — The majority of tenants shopping for lease options can’t qualify for a traditional mortgage. Many of these candidates have full intentions of being able to eventually purchase the home, but few end up taking the necessary steps to clean up their finances to qualify for a loan.
* Poorly written contracts — All too often, these deals are made between two parties without consulting professional real estate or legal advice. Real-estate agents with no experience in lease options can often complicate the situation by providing bad advice. Malicious investors and property owners make things even worse by using shady agreements to extract large deposits and inflated rent payments, while never intending to actually sell the property.
Situations where lease options succeed
Is there any good news in all of this? Fortunately, yes. I’ve been involved in many successful lease-option transactions, where both parties walked away with smiles on their faces. Here are some situations in which lease options can shine:
* A genuine landlord who can’t sell quickly in the current market and understands the value of strong tenants.
* Homeowners who have recently relocated, can no longer support two full mortgage payments, and are willing to lease to tenants with an incentive to maintain the property.
* Tenants who have already turned their financial lives around and need a little more time to qualify for the best mortgage rates.
* Tenants who could qualify for the loan and afford the purchase, but have specific situations where purchasing immediately is not desired.
* There are a several situations where property owners may have legitimate reasons to desire a delayed purchase due to tax implications.
In our current economy, the value of a strong tenant has skyrocketed. Many landlords and property owners will be extremely flexible with tenants who can accurately demonstrate their strengths. This can include extending low-cost options for those tenants who may want to purchase the property in the next couple of years.
By locking in the future purchase price of a lease-option in today’s market, you’ll have the ability to capitalize on any rebound in housing prices without having to risk buying in haste. If housing prices remain consistent or dip further, you are under no obligation to follow through with the purchase. In most cases you’ll only be out the up-front fee that you paid for the option.
Like many of the topics covered in personal finance, a lease-option is just another tool for you to consider. When used poorly or with malicious intent, they are disasters waiting to happen. However, when used in an appropriate circumstance with the guidance of competent professionals, they can be a powerful addition to your arsenal.
Thursday, 8th October 2009 (by Baker)
This article is GRS staff writer Adam Baker. In addition to his work at Get Rich Slowly, Baker blogs over at Man Vs. Debt, where he publicly tracks his spending on a daily basis.
Everywhere I turn, people are speculating on whether housing prices have bottomed. While I personally feel things are looking better, I’m never a fan of trying to time markets. Attempting this often encourages people to make large financial decisions before they are fully prepared or informed. Buying homes in haste is one of the factors that got us into our current financial crisis.
Luckily, there may be a silver bullet for those of you who aren’t willing to rush to buy but are still considering a home purchase within the next couple of years. Your solution may take the form of a lease option.
What the heck is a lease option?
The first thing you need to know about lease options is that everything is negotiable. This can quickly turn a set of simple principles into an extremely complex transaction.
Having said that, here are some common features to help you grasp the concept of a lease-option:
* A prospective buyer pays an option fee, which buys the future right to purchase a property within a specified time-frame.
* Unlike a traditional deposit, the option fee is usually not refundable.
* The fee paid for the option (or option fee) can vary widely, but is typically larger than a traditional deposit, and often ranges between 1-3% of the future purchase price.
* The future purchase price is either fixed up front, or a way to determine future market value is established. For example, at the eventual time of purchase, both parties may agree to average two independent appraisals.
* Many contracts will have a length of between one to three years, although this too is flexible.
* Throughout the contract, the buyer leases the property at a pre-set rental rate.
* Some agreements credit a specific portion of the monthly rental rate against the eventual purchase price. This can add legal complications and potentially present problems with mortgage lenders (who all have different guidelines and allowances for this).
Remember the first thing you need to know: everything is negotiable. These are just a few general guidelines to introduce the concept.
Disclaimer: The laws governing lease-option transactions vary greatly from state-to-state. The typical real estate agent does not have the experience or credentials to properly advise on these contracts. Always have an experienced real estate attorney review your unique situation and prepare/review any applicable documents.
The majority of lease options fail miserably
The average lease option and/or rent-to-buy arrangement is destined to fail. There are several reasons for this:
* Desperate landlords — Many times, lease options are used as a last-ditch effort to sell an overpriced property. Owners are either unwilling or unable to move off a certain price, and therefore turn to any technique that has a chance of bringing the desired sale price.
* Desperate tenants — The majority of tenants shopping for lease options can’t qualify for a traditional mortgage. Many of these candidates have full intentions of being able to eventually purchase the home, but few end up taking the necessary steps to clean up their finances to qualify for a loan.
* Poorly written contracts — All too often, these deals are made between two parties without consulting professional real estate or legal advice. Real-estate agents with no experience in lease options can often complicate the situation by providing bad advice. Malicious investors and property owners make things even worse by using shady agreements to extract large deposits and inflated rent payments, while never intending to actually sell the property.
Situations where lease options succeed
Is there any good news in all of this? Fortunately, yes. I’ve been involved in many successful lease-option transactions, where both parties walked away with smiles on their faces. Here are some situations in which lease options can shine:
* A genuine landlord who can’t sell quickly in the current market and understands the value of strong tenants.
* Homeowners who have recently relocated, can no longer support two full mortgage payments, and are willing to lease to tenants with an incentive to maintain the property.
* Tenants who have already turned their financial lives around and need a little more time to qualify for the best mortgage rates.
* Tenants who could qualify for the loan and afford the purchase, but have specific situations where purchasing immediately is not desired.
* There are a several situations where property owners may have legitimate reasons to desire a delayed purchase due to tax implications.
In our current economy, the value of a strong tenant has skyrocketed. Many landlords and property owners will be extremely flexible with tenants who can accurately demonstrate their strengths. This can include extending low-cost options for those tenants who may want to purchase the property in the next couple of years.
By locking in the future purchase price of a lease-option in today’s market, you’ll have the ability to capitalize on any rebound in housing prices without having to risk buying in haste. If housing prices remain consistent or dip further, you are under no obligation to follow through with the purchase. In most cases you’ll only be out the up-front fee that you paid for the option.
Like many of the topics covered in personal finance, a lease-option is just another tool for you to consider. When used poorly or with malicious intent, they are disasters waiting to happen. However, when used in an appropriate circumstance with the guidance of competent professionals, they can be a powerful addition to your arsenal.
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