Rent to own your home: Is it a good idea?

By Paul Moore

The term “rent to own” was once reserved for retail stores where consumers with poor credit could make installment payments on furniture, appliances, and electronics. But nowadays – thanks in part to an abundance of homeowners who cannot sell their houses quickly enough, reluctant banks that are not eager to finance houses, and renters who lost their previous homes to foreclosure – many homeowners are willing to work out rent to own agreements with prospective buyers.

Rent to own homes: How it works

Rent to own homes are similar to car leases. Renters pay a set amount each month to live in the house, just as lessees pay to drive a car each month. A portion of each month’s rent is income for the seller, and another portion is set aside toward a down payment to eventually purchase the home. After a set period – for example, three or four years – the renters have the option to buy the house, just as lessees have the option to purchase the car they had been leasing.

Pros and cons of renting to own

When it comes to rent to own homes, there are both pros and cons for both parties involved. Pros for the buyer include being able to get a feel for the house, the neighborhood, and area schools before making the final decision to purchase. The procedure also gives buyers more time to save for a down payment while they are living in the house.

On the flip side, buyers will lose their investment – the portion of each month’s rent that was being allocated for the future purchase – if they fall behind on payments and are evicted, if they have to move out for another reason, or if they simply change their minds. Also, the home’s value could decrease substantially between the rent to own contract agreement and the actual time of purchase.

Rent to own agreements are considered beneficial for sellers that have to relocate for work purposes and wind up with two mortgages. They receive a monthly payment that can go toward their mortgage payment on the house without waiting for the house to sell outright.

Beware! Things to watch out for

If you decide to rent to own a home, it is in your best interest to investigate the home’s purchase history and view its deed – this can be done at the clerk of the court’s office and often online. You should also ask to see several months of recent mortgage statements and receipts from the current owners to ensure they are up-to-date with their payments.

Scam artists have been known to “rent” vacant homes they do not even own, pocket the money they receive, and skip town, leaving renters in quite a predicament. Some legitimate homeowners also scam their future homebuyers by accepting rent to own payments with the promise of future purchase even though the home is in foreclosure.

Whether you are the current homeowner or the renter, it is in your best interest to have a real estate attorney create a contract to ensure that all legal avenues are covered should you decide to rent to own a home.

Paul Moore assists corporations in the booming oil regions of North Dakota, provide quality housing for the influx of laborers to the fields. See http://bakkenresidencesuites.com to find out more.

* Image attribution:  Royalty Free or iStock source: http://bigstockphoto.com

Are you throwing your net worth into the wind?

Mitt Romney wants you to ask yourself whether you are better off now than you were four years ago. Obviously, he is trying to get elected, but it is a good question. Not simply because president Obama has been the steward of a failing economy, but as a way to see if you are one of the millions that wastes large amounts of money each year. To find out, here are ten common ways that Americans throw their net worth to the wind.

10 Ways consumers piddle away their net worth

• Banks raked in $7 billion in ATM fees last year. Surely, you can find an in-network ATM. Another suggestion is to shop around for a bank or credit union that will waive or reimburse ATM fees in exchange for a direct deposit or other consideration from you.
• Collectively, Americans spend an average of $12 billion on traffic fines each year. Do you really need to give the government more money than they already collect from your paycheck?
• Do you feel lucky? $31 billion went to lottery sales in 2010.
• $29 billion went to candy makers. Look for more creative ways to say you are sorry and healthier ways to snack.
• $44 billion was spent on tobacco products. That amount does not include the health care costs associated with tobacco use.
• $50 billion was spent on booze. Again, this does not include the costs of a DUI or health issues from drinking excessively.
• $49 billion was wasted in credit card interest last year alone.
• Didn't get enough of the hose on a lottery ticket? Americans spent $125 billion at casinos last year. No wonder they comp so many rooms.
• A total of $146 billion went into the wind in the form of wasted energy. You can find plenty of suggestions on how to reverse that trend at energystar.gov.
• On average, Americans throw $165 billion in food into the trash each year. For many it is the habit of buying on impulse that leads to having food expire at home. Writing a list, never shopping hungry, and using coupons are all easy ways to lower the amount of food that you throw away each week.

Even if you do not stop your bad habits, maybe you can cut back on them. After all, we all have a vice, but curbing it could save you hundreds, if not thousands, each year. Get control of your habits, then ask yourself if you are better off than you were four years ago.

This guest post has been provided by Keystone Auto Loans, a company that helps people get approved for auto financing despite high risk credit situations such as bankruptcy and repossession. Go here to learn more.