Questions and Answers
Your Questions About Apartment Ads For Rent
How does “Rent to Own” work?
I’m looking for an apartment and I’m coming across a lot of ads for “rent to own”. Is this some type of scam? I get the basic idea that you pay rent and then when your done you end up owning the place but I know there must be some catch. Can someone please explain it to me? Thank you.
No, it isn’t a scam, but be careful of which company you go through. Some are doing it at such high rates that it makes it not worth it. I think it is better to deal with the home owner than with one of these companies. They seem to be more about the dollar than actually wanting to sell the home.
This is how it works. Usually you pay an “option fee”, this is like a down payment that would go towards the purchase price of the home once you obtain financing. However, if you don’t end up buying the home in the end (whether it is because you couldn’t get a mortgage loan or because you didn’t like the house, etc.) you would lose your option fee. Often the owner will also charge a bit extra for the lease, this extra would work the same way. It would go towards the purchase price and lost if you don’t end up buying the house.
Why can these plans be beneficial for some people? It gives you time to prepare yourself for home-ownership. Most people that do these are trying to reestablish their credit scores. Giving yourself a year or two would not only give you that time to improve it, but you are also proving to a mortgage lender that you have been responsibily paying the rent (should be what the mortgage payment will be) on the house you will be purchasing. It is also an advantage to the buyer because you lock in the purchase rate at today’s prices, even if the prices of homes goes up.
The advantage to the seller is finding someone to purchase their home that will take care of it like a homeowner. Usually the contract states that the “buyer” will take care of any minor problems with the home. Plus, they aren’t having to worry about making the mortgage payments while the house sits empty.
Hope this helps! If you have any other questions, please let me know.
How to safely arrange for taking over the apartment lease?
I live in shared apartment. My roommate who was the main person on the lease is moving to a different state. I cannot take over the lease because I don’t make enough money. I plan to post a classified ad to find someone who can take over the lease. Is it a bad idea? What are the potential pitfalls? What to be aware of?
My landlord said it will be possible to do it. They allow sub-leasing.
Since your roomates present lease allows him to sublease, you are half way to a solution. Next step is to execute a written sublease with your roomate specifying that you are to pay the landlord directly. The nest step is to find another roomate who is stable and can pay the agreed upon share of the rent on time. You need to execute a written agreement with the new roomate in order to avoid problems down the road. Make sure you include things like utilities in your agreement since they are often the source of arguments. Ever watch “Judge Judy”? I can tell you that the roomate disputes are all too common.
Good luck with your situation.
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