Rent to own homes are becoming more and more popular as the housing market continues its struggle to rebound. For many, this rent to own approach to mortgage financing has become the most attractive option in achieving their dream of home ownership.
While the majority of companies in the rent to own industry, like RentUntilYouOwn.com are reliable, verifiable and trustworthy, some are not. In order to avoid rent to own scams you need to know what to look for. This article will show you major types of scams in the rent to own industry. By the end of this article you will know what to look for, how to avoid it and what to do to ensure that your rent to own experience is a positive and successful one.
Down Payment Scams
Some companies will refuse to refund your down payment in the event that you are unable to obtain a mortgage within the first 1 to 2 years of renting the home. Though this is not technically illegal, it certainly constitutes a scam. Part of getting involved with rent to own homes is that a portion of your monthly rent is paid towards owning the home.
If a company refuses to refund your down payment after a long period of paying into owning the house, you have wasted thousands of dollars, not only on the down payment, but on the monthly payments you were making towards the house itself. In other words: You were scammed twice.
Be sure to check your contracts before moving into a house. If you are unsure as to your ability to come up with a down payment on the home within a certain amount of time, then you must avoid contracts that stipulate a non-refund of the initial down payment.
Fixed Price Scams
Since a portion of your monthly rent payments are set aside as payment for the house itself, scam artists have found ways to take advantage of this extra money without the tenants being aware.
One of the most common scams that occurred during the housing crash of 2008 was rent to own companies creating contracts that promised “fixed price” guarantees upon signing. For those renters who were hoping to lock in a good deal, this seemed like a dream come true. Unfortunately, this dream quickly turned into a nightmare as housing prices plummeted. The “fixed price” that so many people had touted as a good thing, soon became the reason that renters could not obtain a mortgage.
In order to avoid this scam make sure that the “fixed price” clause in your rent to own contract allows for price plummets. You don’t want to be stuck with a fixed price of a $200,000 home that is actually valued at $125,000 due to market conditions. No mortgage company will lend you the money on such a mismatched valuation.
Avoiding scams is possible when looking at rent to own homes. Be sure to check the contracts that you are signing and ask about the topics covered in this article. For many, renting to own is a fantastic solution to purchasing a home.
For more information and to find free listings, please visit RentUntilYouOwn.com.