We are now networking with a number of local agents to provide you with the widest selection of homes with a rent to won option.  This service is available to the serious home shopper, who wants to get out from under the rule of the land lord, and experience the responsibility of home ownership.

In the City of Milwaukee, homes are available for as little as $50,000.  Monthly payments as low as $300 per month plus taxes and insurance.  Following is a particle list of the minimum requirements.

 

• All credit scores must be in the mid 600's or close

• No bankruptcies within the last two years
  

• Call about a Chapter 13 bankruptcy
  

• 3 months of reserves after closing
  

• Plus 5% of the purchase price down payment/option fee
  

NEW Homes are available in Hartford for as little as $219,900.  Monthly payments as low as $1200 per month plus taxes and insurance.

• Credit scores as low as 640.
  
• No bankruptcies within the last two years
  
• Down payments as low as 2 months rent

There are a number of new construction homes available with a rent to own option in Oconomowoc, Greenfield, Hartford, West Bend, Oak Creek, and Pewaukee.  List prices start at $189,990 for 1500 square feet.  Rents starting at about $1200 per month.  Call for a list, for additional details, or to schedule a showing appointment.  414-426-1784. 

 Rent to own homes may be an option, but the choices are very limited.  Less than 5% of available homes are offered with a rent to own option.  

The typical rent to own option may require 5% or more as a down payment.  In most cases the deposit is used as a down payment when the final purchase is executed.  On a $100,000 this would be $5000.  Based on the standard rent to own contract, buyer and seller agree to the terms, which include, purchase price, down payment, rent payments, a time limit in which the final purchase must be completed, distribution of the down payment, and other conditions.  

Many sellers will require the buyer to be enrolled in a credit repair program if their credit score is below 640.  It is advisable to enroll in a credit repair program as soon as possible.  

If the purchase can not be completed within the specified time, the seller may ask the buyer to agree to forfeit the deposit funds.  This is a condition which must be carefully considered.  An automatic extension period may be added to the agreement, contingent upon conditions, such as enrollment in a credit repair program, and additional down payment, and other terms.  

The minimum rent amount is usually calculated on the mortgage payment of the purchase price, with an interest rate of 6%, plus taxes, and other expenses.  On a $100,000 home the mortgage amount may be around $600 per month.  The rental amount would be $600 a month plus taxes, usually between $300-$400 pre month, plus other expenses.  On a $100,000 home, minimum monthly payments may begin at $900 per month.  The seller may request an additional amount which may be applied to the down payment for the final purchase.  

Since the goal of a rent to own property is to obtain a mortgage to purchase the property, the first step is to determine the mortgage amount you will qualify for.  You can contact me for a list of local lenders I have worked with in the Milwakee area.  You may want to check with the bank you are now doing business with.  A licensed loan officer will be able to tell you how much of a home you can afford, based on your income.  They will also explain your credit score and counsel you on maintaining, or raising your credit score.  If you find out you need to raise your credit score, I can send you a list of lenders offering credit repair services.  

Once you meet with a lender, you will have the information you need to move forward on a home purchase.  If you qualify for a mortgage, you may want to consider this option, rather than a rent to own.  Knowledge is power.  

A Rent to Own Option may be perfect for Buyers who find themselves just one step away from realizing their dream of owning a home.  With today's prices you may never get another chance to own for the same cost as renting.  A Rent to Own Option may be the bridge you have been waiting for.  

Applying for a rent to own option is much like applying for a home loan.  The main difference is, the lender uses cash funding from a private investor to purchase the home.  Because the stock market is doing so poorly, there may be additional funds available at this time.   Because they use private investors, credit scores may be much lower than required for other types of loans.

Private investors look at this as a short term investment, usually 3-6 months.  During that time, you agree to fulfill a credit repair program.  This will guide you through a number of steps to raise your credit score and allow you to qualify for a conventional or FHA loan.  When you are able to, you will apply for a loan through a lender, buy the home from the private investor and afterwards, take advantage of the tax deductions allowed home owners.  Also any increases in equity when prices do rebound are yours, you need not share the increase with anyone.  This will allow you to take advantage of the low housing prices we are seeing today.

With all investments there is a risk which must be shared by all parties involved. All investors will ask the Buyer to make a cash commitment.  This is usually 3 to 5% of the initial purchase price of the home.  Your cash commitment will generally be applied to the down payment on your loan, used to purchase the home from the private investor.  If you fail to complete a credit repair program, miss payments, or the contract is nullified for any reason, your investment is non refundable. 

Other expenses to consider when dealing with a rent to own option are closing costs, rent payments and credit repair fees.  Because this is a service provided by a lending Broker, these fees vary based on a number of circumstances.  Make certain you understand each of these expenses and how each is applied.  This will provide you with information you will need to make a wise financial decision.

Contact me for more information or to schedule a showing.  414-426-1784

Rent to Own News

September 14, 2010

Minimum Credit Scores Announced for FHA Loans

HUD has announced that beginning October 4, 2010, borrowers with a credit score below 500 will not eligible for FHA-insured mortgage financing. Borrowers with a credit score between 500 and 579 are limited to a 90 % LTV, which requires a 10 percent downpayment. Borrowers with a credit score of 580 or higher will be eligible for maximum financing and a minimum 3.5 % downpayment. Borrowers with nontraditional credit histories also may be eligible for maximum financing. See the HUD Mortgagee Letter 10-29 @ http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-29ml.pdf

Survey of Rent-to-Own Customers

While there has been considerable debate concerning the rent-to-own industry over the past decade or more, with allegations of serious consumer protection problems and proposals for various forms of national regulation, there has been little independent systematic examination of the typical experience of rent-to-own customers.  FTC staff attempted to fill this gap by conducting a nationwide survey of rent-to-own customers.  Between December 1998 and February 1999, over 12,000 randomly selected U.S. households were surveyed, identifying over 500 rent-to-own customers who were interviewed about their experience with rent-to-own stores. 

Read the entire report:  http://www.ftc.gov/reports/renttoown/rtosummary.shtm

Gap between cost of renting, buying narrows

LOS ANGELES — Thinking of buying a home? Consider this: The gap between monthly rents and mortgage payments is at its lowest level in almost 20 years.

In some markets, the difference can be less than $100, according to a national study conducted for The Associated Press by Marcus & Millichap Real Estate Investment Services.

The full story:  http://www.msnbc.msn.com/id/36650111/

Do you need professional real estate help in order to find a home in Menomonee Falls, Milwaukee, Brookfield, Wauwatosa, Germantown, Brown Deer or in another location in the Greater Milwaukee area?  Please fill out the following brief real estate quick request form describing how I can be of service. This form will help me provide you with outstanding real estate service. Or feel free to contact me by phone at 414-426-1784.  Thank you for your interest.