Rent To Buy Your Next Home – Part 1

With many of the worlds real estate markets are facing slower periods and bank interest rates starting to climb higher, the housing affordability for many hopeful home buyers is becoming further out of reach. This is especially true for people with spotty or no credit where they enjoy reliable income but can’t get past the first base of buying their own home through a bank or mortgage company.

Many real estate institutes around the world are starting to recognize that Rent To Buy systems are becoming a viable alternative for many. When we use the term Rent To Buy, it’s important to note that there are many variations to its meaning, so lets cover what the most typical meanings of this term covers.

1. It can mean that a motivated seller or investor makes the home available without the need to qualify for a normal bank loan. Normally this means that the seller will allow the tenant to purchase the home with regular principle and interest installments over a period of time, so that the tenant will become the owner over time.

2. It can mean that the owner is prepared to share some of the equity with the tenant in exchange for the tenant keeping the home in immaculate condition and they pay a higher rental income to the owner, in exchange for a share in the future equity of the home.

3. It can mean that the owner allows the tenant to pay a small down payment known as Option consideration and the tenant receives rental credit each week to build up their deposit to eventually buy the home they are renting.

While there are many other variations on the above three meanings, all of the above examples give a general overview of what the term Rent To Buy actually means.

So how do you find someone who is willing to give you a Rent To Buy Home?

The first thing you can do is look in your local paper in the classifieds section and look for advertisements that say “Rent To Buy” or “Owner Will Finance” or “Seller Finance No Bank Qualifying” or “Low Down Owner Finance”. If you find these advertisements, you will be sure to know that you have investors in your local area offering these Rent To Buy home buyer packages.

When you call these advertisements, the investor who placed the advertisements will want to know some information about you and your financial position. In some countries, the governments offer generous First Home Owner grants and this can be an important question for the investor, because it means they get more from you in terms of the size of the down payment. They will want to know what your credit rating is like, in order to know how long they would expect you to be in the deal with them. Some investors are motivated by short term deals, while others like longer term deals like five or more years.

Don’t be put off by the questions they will ask you. Be open and honest with all the questions, because unlike going through a bank to get a home loan, this investor will become like a bank to you if you end up purchasing a home through them. Trust is absolutely the most important thing you can establish up front.

Don’t be too concerned if your credit rating is not so hot. The important steps you need to take are getting into a deal that will provide you with some long term asset accumulation. You need to be careful at the same time, that you don’t let your emotions stand between you getting a fair deal and an unfair deal for you. Buying your own home is a very emotional process and needs to be done with extreme caution.

Renting to buy is one of the best ways to secure your own home. When you are buying without banks, your purchasing options increase enormously.

In the coming articles, we will discuss the important things you must do as the buyer to help protect your interests, without making the seller walk away from the deal.

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