Rent to Own Homes Can Ease Financial Stress

Rent to Own Homes Can Ease Financial Stress

If you’ve ever applied for a mortgage loan, you know how important your three-digit credit score is. This score acts as a numerical summation of how responsible you’ve been as a consumer. If your score is low, you’ll struggle to borrow money, get affordable auto insurance, and, in many situations, land your dream job. Fortunately, there is an effective way to work around bad credit scores and nevertheless live in your own home: Search the area’s rent to own homes.

By entering into a rent to own agreement, you’ll gain the opportunity to live in a house without needing a high credit score to acquire mortgage financing. And while you’re living in this home, you can take the steps on your own to rebuild your credit. When your scores are then high enough, you can apply for a mortgage loan with far greater confidence.

The market for rent to own homes is booming today. That’s because of the residential housing crash. During the housing expansion years, sellers were able to move their homes at asking price; they often sold their homes within days of putting them on the market.

A Busy Rent to Own Market

This has changed. Today, sellers are struggling to acquire any good offers. Many of their homes have plummeted in value since they purchased them. In fact, research firm First American CoreLogic estimates that more than 22 percent of homeowners today are underwater, meaning that they owe more on their mortgage loans than what their homes are worth.

Many of these homeowners have decided to offer their homes on a rent to own basis today instead of sell them for a loss. Under such an arrangement, you’d sign what looks like a typical apartment lease. But after a set period of time, often three years, you’d have the chance to make an offer to buy the house that you are renting. While you are paying rent, your landlord will withhold a portion of your monthly payment that will be used as a down payment should you decide to buy the house.

Rent to own homes give you the opportunity to decide whether the life of a homeowner is the right one for you. You might discover that you hate weeding the backyard or that you cringe whenever it’s time to shovel the walk. If that’s the case, you can happily keep a renter.

Avoiding the Credit Score Curse

Rent to own homes also give you the opportunity to move into a house without needing the high credit score that most lenders require today. If your score is under 620, for a traditional loan, or 580 for a loan backed by the Federal Housing Administration, you’ll struggle to acquire mortgage financing from a traditional lender. But when you go into a rent to own agreement, your credit scores don’t matter.

While you’re living in your rent to own home, you can then take the simple steps necessary to enhance your credit scores like:

• paying your bills on time every month

• not missing any payments

• cutting down on your credit card debt

No Secret to Credit Repair

That sounds simple, but these really are the secrets to little by little improving your credit scores; just don’t expect your scores to jump overnight. There is no way to raise your credit scores by a meaningful amount in a short period of time. Rebuilding your credit requires patience and commitment on your part.

Rent to own homes represent a great opportunity for credit-challenged people, including you. So don’t fret about those low credit scores and how they’re keeping you from the life of a homeowner. Instead, seek out your local batch of rent to own homes; these homes can get you started on the path to homeownership.

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