i would like to know if rent to own is a good idea,and what should i watch out for.

Rent to own or lease options can be great opportunities. You can get into a house you like without wasting rent on a house you are not going to live in/buy.

Make sure you have an attorney carefully write and/or review the agreement before you sign. In NJ, if you agree to buy by a certain date and you CAN NOT obtain a mortgage, the Seller is entitled to all the extra money that was put aside in the rent-to-own agreement. I always caution tenants against this situation, just be sure you are protected. I wish you the best of luck.

Hi David, Jim is right on. There aren?t any guarantees that the lending guidelines between now and then won?t change, that the appraisal value down the road won?t decrease or as Jim said, the seller?s finances will be strong enough to sell this property. You can record your interest in the property to give yourself security that he won?t sell it to someone else, but again ? no guarantee. Not to mention ? where do you want to be? Is this the house of your dreams or is it convenient because it?s offered on terms you find favorable, like rent-to-own? If you can purchase, you?ve got much, much more choice and much, much less risk! If you wish to move forward with a contract such as rent to own, since there are no guarantees, you?ll want to put down as small of a deposit as possible, just as a show of good faith that you wish to purchase. Each month you?re renting to own, you?re simply renting. When you?re ready to purchase, your initial payment might go toward your down payment required for your loan when it comes time, or the seller may pay your closing costs from that. Whatever you agree to is fair, just get it in writing! Suggestions & Hints: * If you can afford 1.5% down, you can probably afford a low interest OFHA loan! *If you choose to rent to own, record your interest with the recorder?s office! *Less the down payment, calculate the purchase price by $5 per every $1000 you?d have to borrow. That?s $500 for a $100,000 loan. Add @ $70 for mortgage insurance, $200-$300 per month for the property taxes, homeowner?s insurance and utilities (you can get the average utility costs from the utility companies for this property). After it?s all added up, can you still afford this house today and a year from now? Make sure, because if you can?t and you think you can, you could be losing out on your hard earned deposit! Good luck to you and thank you for reaching out to ask an important question!

David, If you can afford to buy at today's prices and interest rates, you will save money in the long run by buying now. That doesn't answer your question, so here is one thing that would concern me in this situation: CAN THE SELLER AFFORD TO SELL? Not just today, but for the term of your contract. Is this property going into foreclosure? Short sale? Is the seller financially sound? I don't know how you can ever be sure of this, so there is a degree of risk. Asking the seller for their credit report sounds strange, but both of you need to protect yourselves. Good luck.