The tightening mortgage guidelines have left many potential homebuyer’s unable to get a home loan. As a result, lease to own homes are becoming more and more popular. Lease to own home (or rent to own homes as it is often called) have numerous benefits to the tenant buyer. Let’s look at a few!
-No Credit Qualifying
One of the biggest reasons that people choose to get a lease to own home, is because they have credit issues that prevent them from securing conventional financing. Most lease to own approvals are based strictly on your ability to pay. This makes them very attractive to people who have bad credit but stable income.
-Potential to Profit from Appreciation
Because the purchase price is set up front in a lease to own contract, you know going in what you will be expected to pay for the home. If the home does appreciate during your rental period, you will still only be required to pay the pre-agreed on price. This means that the appreciation goes to you, not the current home owner.
-Decreased Down Payment
The changes in the mortgage industry have increased the about of cash that you have to come up with to secure a loan. In fact, FHA just announced that it will be requiring 10% down from any person with a 580 credit score or less. With a lease to own home, you can get in for much less. The option fee you will be expected to pay will likely be somewhere between 2% and 5% of the purchase price of the home.
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