Why Purchasing a Home with using The Rent to Own Home Process?
For those who can’t qualify for a conventional mortgage, a Rent to Own presents an excellent opportunity for first-time buyers to realize their dream of home ownership. Rent to own became a popular financing tool in the early 1980’s. Rent to Own was primarily used as a way to circumvent alienating clauses in mortgages. Skeptics claimed the sale was not really a sale because it was a lease; however, courts argued otherwise. Today, lease options and lease purchases are becoming more popular as a result of lending institutions tightening their guidelines in the wake of the economic downturn. The laws defining these financing documents are state specific and not all states have identical laws. The information below is an overview and is not intended to be construed as legal advice.
For those who can’t qualify for a conventional mortgage, a Rent to Own presents an excellent opportunity for first-time buyers to realize their dream of home ownership. Rent to own became a popular financing tool in the early 1980’s. Rent to Own was primarily used as a way to circumvent alienating clauses in mortgages. Skeptics claimed the sale was not really a sale because it was a lease; however, courts argued otherwise. Today, lease options and lease purchases are becoming more popular as a result of lending institutions tightening their guidelines in the wake of the economic downturn. The laws defining these financing documents are state specific and not all states have identical laws. The information below is an overview and is not intended to be construed as legal advice.
Is Rent to Own right for you?That’s a question only you can answer, but I can tell you that’s it’s probably the easiest way to get into a home of your choice without all of the “red tape” that comes with a traditional bank qualification; and in most cases there may be little or no down payment required to get into the home. This makes Rent to Own a very attractive option for anyone concerned about meeting the banks credit requirements or having to come up with a large chunk of cash for a down payment. To help you better understand the difference between a conventional financing required for a traditional sale and a Rent to Own, we must first understand what conventional financing is and what is required to obtain it. Let’s take a look at the two and compare. Conventional Financing for a Traditional Sale A conventional loan is generally referring to a mortgage loan that follows the guidelines of
government sponsored enterprises (GSE's) like Fannie Mae or Freddie Mac. Conventional loans may be either “conforming” or "non-conforming". Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac. Non-conforming loans don't meet Fannie Mae or Freddie Mac guidelines, but they are also considered conventional. What are the Conventional Loan Requirements?
government sponsored enterprises (GSE's) like Fannie Mae or Freddie Mac. Conventional loans may be either “conforming” or "non-conforming". Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac. Non-conforming loans don't meet Fannie Mae or Freddie Mac guidelines, but they are also considered conventional. What are the Conventional Loan Requirements?
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