If you are a struggling single mother and are currently trying to qualify for a mortgage, then the following article on rent to own homes for single mothers will be an extremely valuable piece of information.
Traditionally, required you to apply for a fixed rate mortgage directly from the bank and required a down payment, along with having good credit. Before the subprime mortgage meltdown, this was actually a viable way to purchase a home because many mortgage lenders didn’t care to check credit and even approved mortgages based on no doc loans. It was much easier to qualify for a mortgage then, but now, times have certainly changed. If you’ve never owned a home before, then it’s possible that you can qualify for the FHA First Time Homebuyer Program. However, if you’re like several single mothers out there, you bought a house you couldn’t afford during the subprime mortgage meltdown, and it has ruined your credit. Therefore, you are about to learn a new way to creatively purchase a new home without going to traditional banks, applying for a mortgage, and getting turned down.
What Are Rent To Own Homes?
These types of loans are much different that your usual traditional mortgage notes. Instead of the bank holding the note on the property, the owner will hold the note until you are ready to qualify for the traditional mortgage yourself. Why would a seller be willing to do this? For many reasons actually, here are just a few reasons why a seller would be interested in selling a home through a rent-to-own deal:
- The home is an investment property and the owner is having a tough time selling it and is willing to consider options
- The homeowner recently was required to relocate his/her family for job related reasons and needs to either sell or rent
- The owner just wants to get rid of the property as quickly as possible
- The home has been on the market for a long time and no one is showing interest
These are just a few reasons why a homeowner would be interested in allowing you to rent to own the property.
When you agree to rent to own the property, you will put down an initial down payment on the property (between you and the homeowner, but nowhere near the 10-20% you’ll need by going through traditional banks) and you’ll also need to provide proof that you can afford the house. Your credit doesn’t have to be perfect and the homeowner will understand that you may have spotty credit. They will most likely perform a tenant background check on you, and that’s about it. The initial down payment that you give the homeowner can also be used as part of the down payment when you apply for the mortgage on the home later on down the road. This will make it easier to qualify for the mortgage if you show that you have paid the “rent” on time and that you had an initial down payment. The official document that you will be agreeing to and signing, is the Lease Purchase Agreement or something very similar. Because, generally speaking, you are leasing with the intentions of purchasing. Usually, these types of lease options purchases run for 18-24 months during after which you must apply for the mortgage. This 18-24 month period will allow you to live in the home, as if it is yours, and also allow you the time to repair/rebuild your credit so that you can qualify for the mortgage. If you can’t qualify for the mortgage at the end of your lease purchase, then the owner has the right to either extend the lease purchase or terminate it.
How To Find Rent To Own Homes
The homes are easy to spot, especially in today’s real estate market. If you look in your sunday paper under the real estate section, you’ll most likely find 5-15 of these homes. Some of the homes will not be advertised as rent to own. You will have to contact the Realtor or homeowner, discuss your situation, and ask them if they would be interested in a lease purchase on the home. Given that the real estate market is in shambles, you have a very good chance of qualifying for these types of “loans”.