Rent to Own Properties Remain Attractive

It's almost impossible to know all the positives and negatives of a home by spending a short time there. In hot markets, some buyers spend mere minutes inside a home before deciding whether to make an offer to purchase. Before making the biggest purchase decision of your lifetime, a rent to own properties program can make good sense to better understand the property and become knowledgeable about your options.

Today May Be Right for Rent to Own Properties

Most tenants considering rent to own properties don't think they can qualify for a mortgage. The fact is that many won't. But today is the time to learn what it will take to qualify in the future, maybe in 2017. Interest rates remaining near all time lows means that mortgage payments are also at all time lows.

Myself and other real estate experts fully expect home prices to continue appreciating in value going into the new year and well beyond. That means home affordability is more attractive today than it will ever be for the foreseeable future. Not being able to qualify for a mortgage today doesn't mean you can't lock in the best purchase opportunity that you may see during your lifetime.

Granted, sellers of rent to own properties often sell for a premium price. That should NOT keep buyers out of the market, especially when they are close to qualifying for a mortgage. Locking in the sales price of a value-appreciating rent to own property quite possibly means the sales price today will be at or below market value when the deal actually closes at a future date.

Planning for Success With Rent to Own Properties

What leads to successful rent to own property deals is a solid and detailed agreement. The three most important provisions of the contract are the price of the home, the cost to rent until the purchase is completed, and the deadline to complete the purchase. Also, what the option fee is and how much will be applied towards the down payment. This arrangement is also known as a lease to purchase option.

Most rent to-own tenants plan to buy at some point, but don’t think they qualify for a mortgage yet. You need a plan to make the purchase happen.

FHA home loans are designed to help Americans fulfill their dream of homeownership and are therefore the easiest type of real estate mortgage loan to for which you can qualify. Among the home loan options available that require a minimal down payment, FHA loans are the most popular. In fact, the FHA loan is the most flexible type of home mortgage loan available.

The best place to start is by achieving the FHA loan prequalification essentials:

• An established steady employment history, at least two years with the same employer.
• Consistent or increasing income over the past two years.
• Your credit report should be in good standing with less than two thirty day late payments in the past two years. The minimum FICO score is 580 (as of November, 2016).
• Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.
• Any foreclosure must be at least three years old with good credit for the past three years.
• Mortgage payment qualified for must be approximately 30 percent (or less) of your total monthly gross income.

If you can answer YES to these statements, you should have no problem qualifying for an FHA home mortgage loan. If not, rent to own properties allow you to work towards these goals over the next couple of years with a purchase price locked in today.

While prequalifying for an FHA loan doesn't necessarily guarantee that you will be able to purchase the home of your dreams, it does help you and potential lenders know your borrowing power and what you can afford. For many, this is the best place to start before entering into a rent to own property.