Profile picture for pan 24

can isell my houserent to own if istill owe amortage

  • January 13 2012 - Roanoke
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Answers (11)

Speak with a re attorney, they provide you with best option
  • February 14 2012
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Roberto does not like the lease/purchase option because he is most likely only a "Realtor" and has not ventured into the property management world. There are many other ways to make a living in this industry then struggling sales my friend.

Lease / Purchase is a better deal for the seller and the buyer then a rental option if it is drawn up correctly. Lease / Purchase is usually 6 months to a year in my area and the deposit down on the home is far greater then a rental security deposit. So if the deal does not close the seller gets a good sized deposit instead of a rental security deposit and this deal is good for the buyer because they have the time to get their credit in order so they can purchase the house.
  • January 24 2012
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Profile picture for Rita Walker
Roberto may not like lease option either. However, in the case of  lease option versus rent to own, lease option requires a foreclosure to remove tenants from the property (costing thousands) whereas rent to own is an eviction (costing hundreds).


Have we scared you yet?
  • January 23 2012
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Rent to own is for fools, do not believe the agents promoting it on this list. Simply put, they have no idea what they are talking about. 

Rent to own is where unqualified buyers meet delusional sellers, the home never sells, and perhaps some lawyers make a lot of money later. 

1. the 'rent owner' will consider him/herself an owner, and immediately embark on remodeling the home. they probably won't know what they are doing, and actually lower the value dramatically. 

2. If the value of the home drops? who still owns it? YOU DO!  If the value goes up, who owns it? THEY DO! So, you get all of the risk, and none of the reward... 

3, depending on state law, they may have equitable title, so when they quit paying the rent, you may have a heck of a time evicting. 

4. If NO BANK in the whole world will loan them money, you want to loan them money? that sounds like a sound idea?
  • January 23 2012
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Profile picture for Rita Walker
You better check the terms of your mortgage prior to embarking on this.
  • January 23 2012
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For a seller that is willing to become a landlord and rent their property the rent-to-own is a much better deal. And depending on how its structured it is also a better deal for the tenant / buyer.
  • January 23 2012
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Profile picture for AEckart

With so many homes for sale, and so few homes to rent available, I am more and more often encountered with the question, " would they be willing to do a rent-to-own?".

I think this is more evidence that homeownership is still in fact the American Dream. It shows that many renters, though not qualified for whatever reason at the moment, inherently do wish to own rather than rent their homes. This scenario however, can be quite complex, and there are some advantages and disadvantages for both parties involved.

For instance, the seller will want some incentive in order to agree to take the property off the market for the duration of the lease agreement. This incentive is usually in the form of a premium tacked on to the purchase price. Why would a buyer want to pay a premium for the house you ask? Well, if there are circumstances which prevent a purchase from qualifying for a mortgage, but they anticipate a change in income, or credit in the future, they may wish to try to start building equity in a home by renting it, and requesting a portion of the rent be credited to them as downpayment money at closing. For instance, if a home is listed for $350,000, perhaps a purchaser would offer $2000/month with $300/month credited back to them at the closing table, enabling them to bring $3600 less in closing costs.

Prior to taking possession, a purchase price is determined. Usually the last 60 days of the lease term, the parties enter into the contract to purchase at the agreed to price.

The landlord/Seller benefits because they know that they have someone who has a vested interest in the property.

Port Jefferson real estate attorney, Margot Garant has structured "purchase option" leases many times for clients. She says, she most often sees the request made if the purchaser has had credit issues in the past or undisclosed income . The transaction is most successful for the parties if the property is vacant.

  • January 23 2012
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Your mortgage will need to be satisfied once you sell and renting your property with or without a mortgage is of no consequence.
  • January 19 2012
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Profile picture for JMughal
Yes!
You may sell your house rent to own even if you have a mortgage.In reality you are not selling you are renting your house out and giving an option to the tenant to excercise his or her right within specified period of time. However, if the tenant does not excercise his or her right with in specified tiperiod of time then you do not have to sell them the house. But if they do excercise you are ound to sell them the house.

Keep in mind selling a property may trigger due on sale clause making entire mortgage due at tim eof sale.

Please consult a qualified real esate broker and attorney.

Hope this helps.

  • January 18 2012
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Profile picture for pan 24
thanks for your advice
  • January 13 2012
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You may reconsider the entire prospect of rent to own. If you offer a purchase option to a tenant it should be spelled out that their failure to complete it within the time frame of the 1st years lease ends that option and it becomes a lease with no other property interests. I also don't suggest that you offer a portion of each months rent toward an equity position. The last thing you want is a tenant that would be considered to under the eyes of a judge have a building equity position in a home that you then couldn't sell if the market improves without buying out your tenant. Also avoid a first right of refusal as you would have to provide an agreement to the tenant that they could then either accept or reject the option to purchase the home under the same terms and conditions meaning that you still have to find a buyer to then sit back and await the tenants decision. The tenant can offer the home for sale during the term of the lease if you don't spell out that the option to purchase is not assignable and even then they still may try. You can't transfer title as that is a violation of your mortgage and the lender could accelerate (demand payment in full at once) for such a violation. I suggest that you rent it only and not sell an asset at a low point in the market or sell it, one or the other

  • January 13 2012
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