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Houses For Rent
Owning a house may not be the right
choice for every person!
"The American Dream is still there," says Bernard Markstein,
senior economist for the National Association of Homebuilders.
"But buying is not the right situation for every person at
every time in their lives." He recommends buying if you plan on
spending 7+ years in your new residence, renting if you're
pretty sure you'll need to move again and consider houses for
rent if you're undecided or if you have blemished credit. While
you'll pay above-market rental rates, you'll pay comparable to
a regular mortgage and you'll buy yourself some extra time to
get better mortgage rates.
There are many pros in snapping up houses for rent-to-own. Real
estate agents recommend temporary rental agreements to buyers
who can't secure a loan due to the difficult market conditions.
For instance, you may have some money saved up for a down
payment, but not the 20% to 25% currently required. A RTO
arrangement will put some of your monthly rent away as the down
payment for your home, so you can enjoy the spaciousness of a
home while gradually saving over a three-year period. Another
bonus is that you will have the necessary time to repair a
damaged credit score and gain optimal mortgage rates, which
could save you thousands in the long run.
Many RTO landlords will set you up in a credit management
program to ensure you qualify at the end of the option period.
If everything goes wrong, such as the loss of your job, credit
markets tighten further and prices dropping, then you won't
have to worry about foreclosure. At the end of your option
period, you can always move, with no more loss than had you
just rented a place.
As with anything, houses for rent can come with a few downsides
as well. Mortgage rates are said to be the lowest since the
fifties, so buyers with good credit who have the cash should
buy now, real estate agents say. If not, the mortgage rates may
be higher at the end of your option period when it's time to
buy. Additionally, people who have a hard time saving or
qualifying for a mortgage might face rejection at the end of
their option period and will be forced to find a new place to
live.
Some rent to own realty includes pricey
option-to-buy fees and higher monthly premiums, so you will
lose more money if you're not serious about buying at the end
of your rental period. Lastly, in an ever-changing market, you
might find yourself locked into an overly high purchase price
if you sign a purchase agreement now and prices keep dropping.
Yet, if you don't sign that agreement now, and the market
rebounds, then your landlord might end up jacking up the price
so you can't afford it.
Forbes Magazine recently looked into the "best and worst cities
to find houses for rent." They looked at places where homes
have been overbuilt, leading developers to consider alternative
offers to attract hesitant buyers. The best markets for
rent-to-own real estate include Cleveland, Ohio; Tucson,
Arizona; Kansas City, Missouri; Milwaukee, Wisconsin; Denver,
Colorado; Miami, Florida; and Orlando, Florida. According to
one rent-to-own real estate website, over 3,000 rent-to-own
homes can be found in Florida, California and Texas.
Pennsylvania, Ohio, North Carolina, New York and Michigan all
have 2,000+ rent to buy homes on the market. Illinois and
Georgia are two other emerging markets for this financing
option.
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