If you’ve begun the process of buying a home, you may have quickly discovered just how important your credit rating is to securing the home of your dreams. Unfortunately, millions of people are denied loans every day due to past mistakes that still negatively impact their credit. The unfair cycle of needing credit to have “good credit, but not being able to obtain credit due to a lack of existing credit, is a vicious cycle that traps many people.
The good news is there are other non-traditional methods to becoming a homeowner. Our mission here at Housinglist is to help educate consumers on these methods and provide a safe and secure catalog of homes available to own.
One of the homeownership methods growing in popularity is rent-to-own homes. With rent-to-own you have time to rebuild and repair your credit while living in the home you will own. While this is growing in popularity, the unfortunate thing is that many would-be homeowners have not yet heard of this news. On the plus side, it’s great news for diligent individuals – like yourself – who are researching these alternative options. This is a growing market allowing people to act quickly without a lot of competition.
How does Rent-to-Own allow you to buy a home with bad credit?
Let’s get down to the nuts and bolts, shall we? Rent-to-own is a type of contract in which the owner of the house rents the home out to someone who wants to (someday) purchase the home. Through negotiation, the owner and the renter, in this case, agree to a purchase price. This purchase price is then locked in, so as the market and home prices fluctuate, your home price is secured.
The next step is determining your monthly payments. Since you’re renting-to-own, this means that a portion of your monthly payment is counted as rent, which is non-refundable. However, part of that will be saved and applied as a downpayment to the purchase price of the home. This is a lot better than simply renting, and throwing 100% of your monthly payment away for no long-term investment.
The final step is determining the contract length. In general, this is about 3 – 5 years, but you can negotiate it directly with the owner to match your current circumstance. The idea is to give the renter (you) enough time to repair your credit or establish good credit. At the end of the lease period, the renter should then be approved for a loan, which they can use to purchase the remaining cost of the home.
The downside to this is if you neglect to seriously work on improving your credit, or saving for a down payment during the stipulated rental contract. If you are serious about owning a home, this gives you a secure environment to start thinking like a homeowner and saving the necessary funds.
Ready to get started? Browse rent-to-own homes near you today. Once you’ve found the home of your dreams, register for a trial to instantly access owner contact deals and more. We wish you the best of luck.