how does rent to own work , what are the stipulations or qualifcations in order to go through with this type of arrangement?
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22 months ago
Rent to own in general does not work. How it is supposed to work - you and the landlord agree on a price of the home and the rent for a certain period of time. The renter would give some money in option fees to the landlord. After the time is up, the renter pays the landlord for the home. Sometimes the landlord can save a protion of the rent each month for the renter to use for the purchase. The reason it doesnt work, there are not that many properties that work like this so many renters have very few choices, less choices the less chance the renter will be really happy with the home.
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generally rent to own is structured by the parties involved - typically there is an agreement for the duration of the contract, rent amount (and if any goes towards the purchase), responsibilities for each party, etc. I agree it often does not work out for the buyer. I have heard from some people that they were doing a "rent to own" then come to find out the house was in foreclosure, so the renter loses his deposit and money towards the purchase. IF you decide to do this, strongly recommended to get an attorney involved.
Alternatively, rent what you want to rent now (hopefully a cheap place - allowing for you to save money towards purchase down the road). Then when you are ready, find the right house to purchase - there is a huge selection right now for sale.
Also recommend you talk to a lender now, have them pull your credit and determine what you need to do to get into a position to purchase a house in the future. Use some resources readily available to help you budget, save and plan. HUD and IHDA have resources on their website. Or Go to the library and get out some budgeting resources (Dave Ramsey has some really good basic ideas).
By the way, IHDA has several grant programs that can help with downpayments, for veterans (welcome home heroes), as wel as
homebuyers in target communities (building blocks - park forest, south holland, riverdale, chicago hts, berwyn and maywood, $10,000, this program requires 600 credit score).
It is a great time to buy, but you do need decent credit (600 minimum) and some downpayment.
Hi Robert, are you working with an agent? If not contact me. Rent to own or Rent to purchase is most commonly associated with consumer goods transactions and lately with some real estate transactions. Your attorney could help you write an agreement for rent with option to buy. Let me know if you could use my service to find you properties that are open to Rent with Option. Thank you. Good luck. TV