Rent to ownYou are about to learn how to rent to own Louisville KY houses and determine if this program is for you. In a nutshell, when you rent to buy houses it allows you to benefit in many ways while settling your feet firmly on financial ground and at the same time offering pride of home ownership to you and your family.

If you have found yourself in situations like many people I have met; you can appreciate the frustrations and disappointments they have encountered while going through the process of looking to buy a house only to be turned down or disqualified from the lender.

They have told me countless stories of how their credit score wasn’t high enough for the underwriter’s liking, or that they didn’t have the 20% down payment required to avoid added mortgage insurance, which increased their monthly payment and that throws off their debt to income ratio. Does any of this sound familiar?

There is a way to get help buying a home without being let down or worrying if you qualify for a mortgage loan or not. Rent to own or also known as leasing with an option to buy is probably the strategy to take when you’re faced with a few obstacles in securing a traditional loan from a bank.

Below I’ll take you through all of the questions you may be asking yourself right now about how all of this works and if it’s right for you. I’ll also tell you how to get started in finding and living in the house you call home.

What is the rent to own program?

Officially, in most states it is called lease with an option to buy. It’s actually two separate transactions that are just what they are called. Lease and option

First the Lease, this is set up like a typical rental agreement for any Louisville homes for rent as if you were renting a house with a set monthly lease payment, terms and conditions of living there during the lease period. The lease period could be month-to-month or multiple years. In this type of lease the main differences is that you would be responsible for some of the regular maintenance. After all you will own the property and will want to share in taking care of it.

Secondly, is the Option to buy the property. This is a separate document that gives you the option, not an obligation, to buy the property you are leasing for a stated, agreed price at some time in the future. This could be one, two, or even five years into the future.

Signing this document gives you the first right to purchase this property and the owner cannot legally sell it to another individual or company within that agreed time period. And because this document does tie up that property for a determined amount of time say 3-5 years it is typical that this option comes with a fee.

The Option Fee is usually anywhere from 3-10% of the purchase price. This amount is also deducted from the selling price you agreed to on the Option. For instance, if the purchase price is $100,000 and the option fee is 3%, or $3,000 then when you exercise the option to buy within the 3 year option period you would settle for $97,000.

Who is the rent to own strategy for?

The ideal people that benefit from this type of purchase are those who can’t qualify for a traditional bank loan right now. These types of buyers have small blemishes on their credit history that can easily be repaired with a short time. They may need a few months to prove on time payment histories, pay off some credit to improve their debt to income ratio, or increase their income to close too many open accounts.

Another group of people may need a house now (lease it) and then can save that down payment later (when exercising the option to buy).

How does the program work?

Basically, you locate a house that you like and discuss the Lease/Option program with the owner.  Then you and he/she will agree on the Lease terms, the Option agreement, and Option fee.  Once those documents are signed; you move in and continue to pay the lease payments on time while working on repairing your credit for the option period.

During this time you are preparing for your purchase of the home prior to the Option agreement expiration.  Ask the seller to assist with introducing you to a mortgage loan officer that will meet with you to get you on the right track early in preparation for that closing day when you will purchase the home.

Another great way to get ready for you purchase is to speak with a legitimate credit counselor, not one that will offer to consolidate your bills and take a fee. You will want one that will help you with a plan to get you ready to qualify for a traditional bank loan.

This is a great time to start putting away some savings for that down payment as well. Let’s say you are buying that $100,000 house in 3 years. As of this writing, today the Freddie Mac and Fannie May requirements for down payment were just lowered to 3% of the purchase price. So that means that in three years all you would need is $2910 for the down payment of $97,000. You already had the Option fee reduce the $100,000 purchase price. If you had a 36 month option; you would just need to put away about $81 a month in a savings account to build up this down payment for purchase.

Where are these houses offered?

These types of rent to own houses can be found in Louisville neighborhoods all over the city. Fill out the form here or call 502*509*4725 and let me know where you’d like to live and the Option Fee you have to work with and I can help buying a home inside of this program for you.

Why does it benefit you?

When you rent to buy houses in this manner:

  • There are no bank qualifications.
  • Use the time you are leasing the home you want to buy to build up a down payment.
  • Use the time you are leasing for credit repair, cleaning up small flaws that appear to banks on your credit bureau.
  • Lock in your purchase price well in advance and possibly build appreciation.

Rent to buy houses or Lease with an Option to buy is a tried and true strategy that you can take to get into home ownership without immediate bank underwriting and a hefty down payment for a great family that may have a few minor items to clean up in their finances.

I hope that this article has helped you understand how Lease/Option programs work and if you would like to learn more; feel free to call or email me with any questions or learn about available rent to own houses in Louisville KY.