How to Set up a Rent-To-Own Situation, and More! – Cook’s Corner
Welcome to Cook’s Corner, where Steve Cook will seek to answer all of your pressing real estate questions. Want to submit a question for next time? Comment on this post!
How do I set up a rent-to-own situation with my landlord?
Here’s how rent-to-own, or lease purchase, deals work. Renters pay a certain amount each month to live in the house, and at the end of a set period — generally within three years — they have the option to buy the house. Each month of rent they pay is income for the seller, while a portion of it goes toward a down payment to eventually buy the home. The down payment is held in an escrow account. To buy the house, you must apply for a mortgage loan to complete the purchase of the home. The terms of the purchase price, including the down payment amount and the amount to be set aside from the rental for down payment, are all set at the time of lease signing.
Buying the home you are renting is a good option for some people, especially for those who might have a hard time saving for a down payment, who live in markets where supplies of affordable homes are scarce, or who don’t want the hassle of house hunting and moving.
If I sell my home for cash, how will I get paid?
About one out of every four homes sold in America is sold for cash. Sellers are paid by cashier’s check at closing. Many of these are purchased by investors, who account for about 14 percent of all home sales, according to the National Association of Realtors. Homes sold for cash require a closing, just like homes that are financed. However, because no mortgage or appraisal is required, closings are scheduled much sooner after offers are accepted. Usually, buyers pay for closing costs and the property with cashiers’ checks.
How long does closing take after my offer is accepted?
If the purchase is being financed, it takes lenders an average of 43 days from the time the borrower applies for a mortgage to closing. Before the implementation of “know before you owe” forms in 2015, it took seven or eight fewer days to process a mortgage.
Before the closing can occur, the buyer must schedule an inspection and obtain title insurance, as well as other services as may be required by local law and custom, such as a survey or pest inspection. Only about 65 to 70 percent of contracts are settled within their scheduled time. Problems with securing financing, appraisal issues, and home inspection issues are the primary reason contracts are delayed or terminated.