Rent To Own or How you can still buy a home with no money out of pocket!
***First Off, let me preface this by making something perfectly clear. No matter what program or product you are getting into to buy a home, I highly recommend making sure you have money (reserves) in the bank after your loan closes. Call it 'rainy day' money or whatever you want, you don't want to be financially strapped if something goes wrong. Ownership has its privileges and responsibilities.***
That being said, there are only two ways I know of to get into a home with no money out of your pocket these days. One is a VA loan, a loan for those who served in our military and who qualify. They are still offering 100% Financing with an allowable 6% seller assist. Those parameters can leave a lot of cash in your pocket.
The other is renting to own and I'd like to go over the basic parameters of how it works as of right now. It should also be noted that things have been changing rapidly, so please contact your Mortgage Professional to make sure they keep you abreast of changes as they occur. With any 'niche' product, time is of the essence because you never know how long it will last under the current guidelines.
While Mortgage Money has become tighter over the past year, the lease purchase program has become an increasingly popular method in which to finance the property the borrower is currently renting. The huge advantage to this program is we treat the transaction as a refinance utilizing the APPRAISED VALUE. Below are some of the program guidelines.
Max 85% Loan To Value Full doc (you must be able to prove enough income to be able to afford all current debts showing on your credit in addition to the new mortgage payment)
Looking for minimum 600 credit score (the middle of your 3 credit scores)
must produce 12 consecutive months cancelled rent checks (this is a documented housing history, Do Not pay by cash or money order.)
Lease purchase contract must be seasoned minimum of 12 months (it's best to record this at the local courthouse for documentation purposes)
Owner Occupied Only
Maximum loan size = $500k
This is a fantastic program that can enable a borrower to purchase their home without any money out of pocket. The only other thing I would note is to get an Home Inspection (which is different than an appraisal...which is required by the lender) done. Though you've lived in the property for at least a year and think it is in good condition, a home inspection will help lessen the chances of some surprise issue coming up after closing. If you have any questions, comments, concerns, critiques, or just want to complain....give me a call or shoot me an email!
