Monday, May 23, 2016

6 GREAT REASONS TO SHOW WHY RENT TO OWN A HOME IS THE WORST CHOICE


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IntroductionIntroduction: Typically in a rent to own agreement, the potential buyer rents the property for a set amount of time  (usually 1 to 3 years), after which he or she can purchase the house from the seller at a predetermined (at the time of contract) price.
Who is rent to own for?
1. Lack a down payment large enough to acquire conventional financing.
2. Good income but Bad/No credit.
 
Why rent to own option is not a good choice:
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1. Deposit: Buyer has to pay the seller a non-refundable deposit (typically ranges from 2.5% to 7% of the purchase price) at the time of contract. Consider that if a home has a purchase price of $200,000 and a 7% option consideration, the buyer would need to pay $14,000 up front.

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2. Higher Rent:  Buyer pays the seller, during the term of the lease, a specified amount of rent ( Often, the rent charged by the seller will be slightly higher than the “going rate” for the area to accommodate the rent credit the buyer receives). In many contracts, a percentage of each monthly rent payment is applied to the purchase price. For example, assume the contract states that the buyer will pay $1,800 each month for rent, and that 20% of that will be credited to the purchase. If the lease term is three years, the buyer will earn a $12,960 rent credit to apply toward the purchase ($1,800 x 0.20 = $360; $36 x 36 months = $12,960).
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3. Insurance Policy: Buyer needs a renter's insurance policy to cover losses to personal property and provide liability coverage if someone is injured while in the home or if the buyer accidentally injures someone.
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4. Not Purchasing the House: If the buyer decides not to purchase the house or unable to secure the financing, for some reason, at the end of the lease term, the buyer looses all the money paid until that point ( rent, deposit and insurance premium etc.). 
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5. Legal Proceedings: If the buyer cannot purchase the property but has a legal obligation to (as stated in the contract), legal proceedings may be initiated..
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6. Left alone inventory: Would you really want to buy the house which everyone else is ignoring? This option greatly benefits the seller because he/she is not able to sell his/her house in a normal way, therefore, seller chooses this option to sell the house in a "so called" creative way.
 
Alternative to rent to own option: There is a good chance that the buyer would not still be able to either improve the credit or have enough money towards the down payments to purchase a house at the time of the end of the lease. Instead of risking your money and time and helping seller by buying his house which no one wants to buy, choose the conventional way to purchase your dream house. Here is how you can fulfill your goal to own a house in near future without any limitations and complications. Be deciplined and follow the below metioned steps;
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1. Work on to improve the credit. Click here to know more about how to improve your credit.
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2. Rent a economical house with normal lease and save money for down payment.

P.S. Want to know more about Real Estate buying, selling, and investment ? Let's discuss Your NEEDS and their SOLUTIONS on 1 hour FREE CONSULTATION, with no OBLIGATION. Visit us at youridealproperties.com or call/text at 4168355068.










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