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A Writer's Den: So You Want to Rent to Own a Home?

Tuesday, June 15, 2010

So You Want to Rent to Own a Home?

credit: Alexsl © iStockphoto.com/alexsl


With the current state of the economy, many people are opting to rent-to-own a home. Credit issues including bankruptcies and foreclosures, or a lack of sufficient credit history are all reasons to consider renting
before purchasing. Another reason, beyond credit concerns, may be your ambivalence towards purchasing a home in a market where houses are losing value everyday. However, if you are thinking about renting to own, the best advice is to treat your rental as if you were actually purchasing it with cash.

Conducting a Title Search

In a purchase sales agreement, purchasers are given a specified period of time, usually a 7 day window to provide proof of financing, conduct an appraisal, obtain a home inspection, and amongst other things conduct a title search of the property. A full title search is a detailed background of the history of the property including the chain of title which details the current and previous homeowners, a lien search to ensure no current liens are attached to the property, and a tax search to determine that all taxes are current on the property. The title search is the most important part of the home buying process because even if you obtain financing, the home appraises at the purchase price or higher, and the home inspection goes perfectly; if the owner does not have valid title to the property, then you can't buy it. And if you can't buy a home due to a title issue, why would you want to rent to own that same home? That was exactly the situation Cameron faced when he jumped head first into renting to own his first home.

Cameron's Story

Failing to conduct a title search was the biggest mistake that Cameron made when he decided to rent to own his brand new $305,000.00, 4-bedroom, 2 ½-bath home. Cameron rented the house directly from the builder through a three year lease with a one year option to purchase. Per the terms of their agreement, Cameron also paid a non refundable security deposit in the amount of $10,000.00 that would be credited towards the purchase price if Cameron chose to exercise the option to purchase. READ FULL ARTICLE: So You Want to Rent to Own a Home?

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