If you are currently living in a rent to own home or you’re looking for this type of transaction, determining how you will qualify to purchase the home is an important question to consider.
Have you discussed mortgage requirements with a professional?
You also need to know how high your credit score needs to be or how much you will need to spend out of pocket for the loan.
Typically, rent to own tenants will us an FHA loan to finance the lease option house they are living in. The FHA loan is used because it is an easy loan to qualify for and currently a buyer only needs 3.5% toward the down payment. With a conventional loan, lenders usually require a 10-20% down payment to finance the house.
Qualifying To Buy A Rent To Own House
When lenders are qualifying potential borrowers they like for buyers to have at least THREE open trade lines on their credit for 12 or more months. Please speak to a licensed mortgage professional regarding further details about your credit and loan needs.
A trade-line is a credit line, it can be a car loan, credit card, or personal loans. Lenders like to see these accounts opened and established to show that you are historically a good credit risk that pays on time. Make an effort right away to open or maintain three active credit lines in YOUR name.
If you currently have bad credit or no credit and you are having a difficult time qualifying for a credit line, one easy way is to sign up for a secured credit card. You can find more information about secured credit cards here.
One of the most important factors involved with your rent to own house are your contracts. Make sure you understand the lease option agreements fully before signing them. Make sure the agreements outline exactly what you are doing.
These are just a few things to make sure you do when buying with a rent to own option.
For more information check out our resources page.
Good luck with your search!