Rental

How Does Rent-to-Own Work When Buying a House?

At Sep 16, 2016

When the market is saturated with homes for sale, rent-to-own becomes a popular option. It solves several problems for both the buyer and the seller. Rent-to-own is a contract to buy, but the closing date has been extended a year or two into the future. The renter has plenty of time to line up financing, and the seller gets his mortgage payments covered with rent in the interim.

Lease Purchase vs. Lease Option

Many people confuse lease purchase–aka rent-to-own–with lease option. There is a big difference. Lease option gives the renter the option to buy the home. The renter is not agreeing to buy it, but if a contract is offered, he may have first right of refusal. In other words, he should produce financing and close on a loan, or make plans to move out. A lease purchase is a contract to buy with an extended closing date. The time is used to save a down payment or to line up acceptable financing.

Buyer Advantages

The buyer in a rent-to-own situation can freeze the price on the home a year or two in advance of when he must close on the mortgage loan. In the contract, he can list payments that will be contributed toward a down payment or toward the sale price. He can move in and try out the neighborhood–and the school system–prior to buying. The extended closing date gives the buyer plenty of time to clear up credit issues or to save down payment money. In the event he does not get financing, however, any deposits he makes up front may be lost.

Seller Advantages

The seller has the advantage of having a renter who is responsible enough to want to buy the home; therefore, he will take good care of it. The rents the seller receives cover all or part of his monthly mortgage payment. The seller also can require a nonrefundable deposit to bind the contract. If, at the end of the rental period as spelled out in the contract, he is not able to close the sale, it can be renegotiated or terminated.

Suggestions

When considering a lease purchase contract, take a look at your credit report to clear up any issues or to raise your credit score. Review the report for errors, duplications and outdated information. Dispute these items by contacting the customer service number on the report. Also, visit a mortgage lender and get pre-qualified for a loan. Even if you have no credit issues to clear up, debt ratios play a big part in mortgage approval. This meeting will show the amount of debt you can handle each month and still be approved for a mortgage. Down payments and loan types will be discussed, making you a well-informed future borrower.

Warnings

Before paying any deposits, do homework to be sure the asking price is reasonable. Ask a real estate agent to do a “sold search” on the MLS to find what similar homes in the neighborhood are selling for. Have a real estate attorney do a title search for you to be sure the seller can pass clear title to you when you close on a mortgage loan. The attorney can also assist you with the contract. Make all payments to the seller in the form of checks. You must have absolute proof of timely rental payments to the seller, as well as proof of any deposits you made so that you can get credit for them from your mortgage lender. Hire an inspector to look over the home; he can ascertain any major construction issues. Major repairs should be negotiated with the seller before you sign a binding contract or pay a large deposit.

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Choosing the Right Furniture

At Sep 16, 2016

Like the move process, the task of properly furnishing your home can be an anxiety-inducing experience, especially since a furniture purchase can seem so very final. But if you follow some smart shopping basics, you’ll reduce your stress and make the right decisions without panicking.

Check out some of our tips below as you approach the process of furnishing your home.

  1. Decide what you like

    Make a list of the colors, textures and patterns that you prefer. Mixing and matching is an acceptable practice, as long as it’s within reason. But if you don’t trust yourself, try to assign your décor to one of the major categories:

    • Casual (comfy-looking, earthy, woods)
    • Contemporary (sharp, angular, metallic)
    • Country (soft, floral, painted woods)
    • Traditional (antiques, dark red woods, damask and chintz)
    • Eclectic (ethnic or artisan pieces, highly individualized)

    Generally, it works best to decide on one main theme for a room, but use contrast to accent your look. And if you’re interested in doing some home décor research, check out TV shows, magazines, books, catalogs, Web sites and furniture chat rooms for ideas. A lot of expert’s will tell you to make a scrapbook of styles that you like to narrow down the options. But most importantly, remember that you’re the one who has to enjoy your surroundings – not the decorator, not your best friend and not your mother.

  2. Evaluate your existing décor

    Take measurements in the room that you’re planning to furnish. Take a cold, hard look at the furniture you already own. How will it all work together? Will your old furniture look as nice next to something brand new? And if you have furniture at home that needs repair work or a facelift, check out our home services center to find a pre-screened furniture repairman in your area.

    If you’ll be mixing old and new furniture, add samples of your existing colors, textures and styles to your scrapbook so you can evaluate a good match when you are shopping. If you are painting, dip a popsicle stick in the paint, let it dry and add it to your scrapbook so you can be sure your furniture will complement the room. You don’t want to rely merely on your own judgment when confronted with 20 shades of blue.

  3. Be honest about your lifestyle

    If you have two toddlers, a 200-pound mastiff and three cats, then you may want to reconsider white silk as the choice fabric for your new curtains. An expensive leather sectional could also be seen as overkill if you rarely entertain guests or have a small living room.

  4. Decide what’s most important

    There’s no rule that you have to buy everything at once. Start with items that need replacing first, and build the room (slowly if necessary) around pieces you love.

  5. Set a price limit ahead of time

    Look for the best values in your price range. Be patient and shop around.

  6. Take advantage of free services where you can

    Many stores have free interior design consulting, product brochures and room- planning guides. Learn to be an expert on the look you’re going for.

  7. Don’t let anyone rush you

    Trust your own judgment. Don’t buy furniture you don’t like, no matter what others recommend. Remember, it’s your home.

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