Apartments for Cheap

Questions and Answers

Your Questions About House Rent To Own

September 3, 2012

Betty asks…

what is the difference from living in a house you own to a house you rent?

what are the disadvantages in living in a rent or own house?
what are the good things about renting or owning?

Administrator answers:

You really have to watch the market. In general, when you buy a house, you build equity and the house gains value. It’s almost like having a high interest bank account. When you rent, you never see any of that money again.

However, if the cost of the mortgage is very high compared to the cost of renting, sometimes it’s better to take that extra money and put it in stocks ahead. For the first few years on a home purchase, you are mostly paying interest to the bank, not earning equity.

Plus you aren’t spending your money on maintenance when you rent. If the toilet breaks, your landlord fixes it. If the siding needs to be redone, not your problem.

Plus you’re less tied down. If you decide you hate your job and want to move to Tahiti to become a cocktail waitress, you don’t have to worry about your house. Just put your stuff on Craigslist and buy a plane ticket at the end of your lease.

If you bought your house three years ago, you have lost money. If you buy at the bottom of this housing marking, you stand likely to gain. The interest rates are great right now as well. Buying a house will mean that you have to keep it maintained and that all problems are your own, so make the decision carefully. It means you really want to stay in the area for awhile, or would be willing to be a landlord if you want to lease it out. Selling in under five years is usually not a good financial move.

I’m trying to make the final decision now, and I’m leaning towards buying after renting for six years.

Maria asks…

is it advisable to rent to own a house in canada if you are a newcomer?

i’m a newcomer, is there any difference between renting a house and rent to own it? if you could pay monthly rent then why not spend it in a rent to own house? help me…
i’m a newcomer, is there any difference between just renting a house and rent to own it? if you could pay monthly rent then why not spend it in a rent to own house? help me…

Administrator answers:

Yes, there is a large difference. Many people with poor credit get sucked into Rent to Owns, thinking its a way to get a house that will be all theirs. And while it is possible to do, its not a good way for everyone. Many people who do not qualify for the First Time Buyers program, or who cannot come up with the down payment also go this route.

The “rent” you will be paying, is usually a few hundred dollars more expensive than just a regular rental, the difference going to pay off what would be a down payment. When, after a few years, you have paid off the down payment, you will still be responsible to find a mortgage company willing to take you on, for the remainder of the moneys owning on the house. A down payment can be anywhere from 10%-30%…….Many people find out after paying off the down payment, that they are still not eligible for a mortgage, due to credit problems, and then loose all the money they have already paid. Also, with many rent to owns, you are responsible from day one, if anything breaks in the house, like the furnace, or any repairs that need to be done, like the roof.

If you have poor credit, but will be repairing it, this may be a way to go for you. I would talk to a financial consultant first, to see what your odds of getting approved for the mortgage will be, when your credit issues have been taken care of.

If you have no credit issues, you could go this route, by why not just pay a down payment, get the mortgage, and cut out the middle man…..it will no doubt be less expensive in monthly bills.

Joseph asks…

What is a rent to own house?

I dont understand how these work i ran into quite a few rent to own listings while looking at houses to rent. I didnt find much about them on the internet. Do you pay your monthly rent and something like a morgage payment as well? Do you eventually buy the house from the owner or do you still take the loan from the bank?

Administrator answers:

This arrangement depends on the contract.

This can also be called a seller financed mortgage. You pay “rent” or “mortgage” payment, property taxes (in many cases), utilities, and upkeep. Many of them are set up for a set amount of time – like 10 years. When the contract is up, you either have to come up with financing or with the balance due (called a balloon payment).

It can be a way to own a house if you don’t have the traditional resources to do so. But the details are in the contract – be sure you read and understand everything before you sign!

Mandy asks…

Has anyone bought a house rent to own or with an investor? What was your strategy?

I live in IL. Dupage county and would like to find a good investor or rent to own program.

Administrator answers:

Just work with a real estate agent and look for undervalued property or lease purchase options. If you know what you’re doing, then venture out on your own with an “investor”. Keep in mind, licensed real estate agents can lose their license and/or be sued for taking advantage of you. On the other hand, real estate investors just can be sued.

Also, the common thing to look out for is a clause which states that you lose your option to purchase the property if you’re ever late on rent.

Regards

Richard asks…

Can i get my own house with rent at $320 a week if im on the unemployment benefit in new zealand?

I live in new zealand, so im really wanting to know if i can get my own house with rent at $320 a week.
can i do this if im studying at wintec for the next 3 years, and if im on the unemployment benefit.

Administrator answers:

No, you have to be employed.

Lisa asks…

A big question about a rent to own house?

My girlfriend and I are trying to move and we found this house thats a rent to own but we only want to stay there for about a year. So my question is do we have to buy the house if we take it? And do that mean we can’t move?

Administrator answers:

Rent to own is more for someone who wants and plans to live in the house (long term)

Sounds like you all are wanting just a yr lease which the seller may not go for…..

Thomas asks…

How to determine purchase price with rent-to-own house?

As a seller, If I have a house that has a current market value of $150,000 and I offer a rent-to-own for 2 years with $2,500 down. The house will be worth more in 2 years.

How do I determine the final sale price in the contract?

Administrator answers:

You can do two things! You could state in the contract that you want appraisal value at the end of the contract or you could sell it for what it is worth now, with the rent you are charging for the next two years it should even out where you don’t lose.

Ruth asks…

I need a house rent to own in Dublin Viriginia area.?

I need a three bd house with a nice yard under 400 a mounth. would like a quiet naborhood. Dose not have to be close to town. prefer something out of town.I dont have pets. prefer one storey but to is fine. would like an out building but not nessusary.

Administrator answers:

Try posting and looking on Craigslist. They have sites for every city.

Sandy asks…

Has anyone ever had problems with a rent to own house?

I am renting to own a small one bedroom house. My landlord is acting kind of shady. He refuses to give me paperwork stating that I am renting to own. I don’t know if I should get a lawyer or what. This is my first time in a situation like this. Does anyone know what kind of paperwork I should have in a rent to own house? I know that need something besides his word. I am going to seek legal advice on Monday, but I was just wondering if anyone else has ever had this problem.

Administrator answers:

I have never done that. I have heard of some horror stories out there. There has to be a contract in place or as part of a written lease agreement that you are having a certain amount applied towards your down payment every month. You have to know that amount. You also need to know that all the repairs are to be done by landlord until such time. This is a one bedroom house, a very difficult home to unload. Another thought, if you have the extra money taken from your account and placed in a savings account, under your name, you can buy whatever you want and not necessarily this home. What if you two do not agree on sell price? Good luck.

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