Do you arrange owner financing for the homes you sell?
Once in a while we have a home featured with owner financing but the predominant
avenue of successful homeownership is through a Lease with an Option to Purchase.
Do I need to qualify to buy a home?
Although it is important to know your past credit status, your ability to
make reasonable monthly payments and your desire to be a homeowner now is
more important.
How can I buy a home when I have bad credit?
You can't through conventional lenders, but you probably will be able to with our help. Owner
financing and Leasing with a Option to Purchase allow many people the time they
need to clean up their credit report and establish an admirable payment history
to help improve their credit over time.
How much down payment do I need?
Option consideration cannot be classified as a 'down payment', but it is an amount
that you would need to put down along with the first month's rent.
The more you put down in the form of option consideration, the easier it is for you
to get financed later on. The minimum option consideration that we accept is 2%
with a goal of 3.5% to 5%.
What other methods of down payment are accepted?
We can accept borrowed funds for option consideration
and the first month's rent. If you have a close friend or relative willing to
lend you money for your down payment, you can use that with our program.
You may also be eligible to withdraw or borrow from your 401K to purchase a
home. We also accept trades.
Do you offer down payment assistance programs?
Yes, we do. Many times, if you are a bit short on your down payment, we can
set up a monthly payment plan spread out over 6 to 12 months.
How does your Rent-to-Own Program Work?
We can lease you the home with the exclusive right to purchase it at a later
date. When you finalize your agreement with our original seller, simply make sure
that the option includes the exclusive right to purchase the property within
the agreed upon term of the option to buy.
Our buyers love this because it gives them the time they need to save up
for a larger down payment, time to clean up past credit problems, time to
sell another home, and also time to try out the neighborhood before buying.
100% of your option fee is credited towards the down payment and the
purchase price of the home, plus you may be eligible to receive a monthly
credit called a 'Rent Credit' towards the purchase price every time you pay your
monthly lease payment on time.
What Is A Rent Credit?
A rent credit is typically an amount of money credited from the
monthly rental payment towards the purchase price of the property.
Most conventional lenders will only accept rent credits from the seller to the buyer if it
represents an amount paid by the tenant over and above the average
monthly rent in the area for a similar property. It is advisable to make 2
payments each month. One for the rent and one for 'premium rent' to be applied
towards a rent credit if the tenant/buyer exercises their option to purchase.
Why Do I Want to Receive A Rent Credit
Rent credits are credited towards the purchase price to reduce the balance of
the principal that you would have to pay later. Also a rent credit can be a very powerful
negotiating tool by using it as a guarantee that you'll pay the rent on time.
By offering to take no rent credit if your payment is late,
you show your good intentions to the seller.
By receiving a generous rent credit, you can afford to give the seller their
asking price or possibly even pay a bit above market because
when applied to the purchase price,
the rent credit can have a substantial effect on reducing the balance.
· For example, if you negotiate a $500 per month rent credit and your
contract term is one year, that's $6,000 you've accumulated toward the purchase price.
Remember though that you would have to be paying $500 per month more than the average
rent for a similar house in the area to be able to get approval from most conventional lenders
for a $500 rent credit. Non-conventional lenders may be more lienient in that regard.
· When negotiating with the seller, you can be non-adversarial by offering
the asking price, provided he is willing to give you a rent credit.
· How about monthly payments... you would probably be willing to pay a bit more each month
if a portion of that was to be credited back to you against the purchase price.
What is the interest rate on your Owner Finance purchase programs?
Typical interest rates range from 7.5% to 10.5% depending a certain extent on your down payment,
your revenue coming in, employment and past credit history.
I want to see some
'rent-to-own' homes,
what is the next step?
PreQualify
Click Here to PREQUALIFY
for a Rent-to-Own or a Lease with an Option to Purchase!
FHA Changes In Qualifying for a Home Loan
FHA and Qualifying for a Home Loan
FHA changing policy on credit score, own payment
By Mary Ellen Podmolik
January 20, 2010
The Federal Housing Administration announced changes Wednesday that will make
it more expensive for homebuyers to secure agency-backed mortgages while some
consumers will be priced out of the housing market.
The proposals, intended to shore up the agency’s loan portfolio, formalize a
multipronged strategy it outlined last month and are designed to protect both
homeowners from obtaining unaffordable loans and the agency from dealing with
the resulting losses from bad mortgages.
“Homeownership is important to the sustainability of communities,”
FHA Commissioner David Stevens said in a conference call with reporters.
“But we’ve also learned that not everybody should own a home. Putting
responsible guidelines in place is a way to insure sustainability for homeowners.”
Stevens said the agency was mindful that it didn’t want to overly disrupt the
housing finance market and the mission of the FHA to serve first-time homebuyers.
Last year, the FHAbacked 1.9 million mortgages, compared with 1.1 million loans
in 2008. FHA-backed mortgages for new home purchases and refinancing now
constitute 30 percent of the total housing finance system, and 50 percent
of first-time buyers go through the FHA.
To be able to make a down payment of just 3.5 percent on an FHA-insured loan,
homebuyers would have to have a minimum FICO credit score of 580, rather than
the current 500 FICO outlined in FHA guidelines.
New borrowers with less than a 580 score would have to put down 10 percent
on a home purchase.
However, that change is unlikely to affect many homebuyers because most
participating lenders require borrowers to have a score of 620 or higher.
Some legislators had called for all FHA-backed mortgages to require a 10
percent down payment.
Stevens acknowledged the stricter origination criteria of most lenders in
2009 and said in determining the new minimum credit score, the agency looked
at mortgage performance records of the past several years, including when
mortgages were much easier to obtain.
The FHA also will increase the upfront mortgage insurance premium to 2.25
percent of the total loan amount, from 1.75 percent.
The agency also will ask Congress for permission to boost the maximum annual
mortgage insurance premium it can charge.
If that authority is granted, some of the premium increase would be shifted
from the upfront premium to an annual one.
As disclosed last month, the FHA also said that sellers would be able to pay
closing costs of up to only 3 percent of a home’s sales price, rather than
the current 6 percent.
Stevens also outlined several steps to increase enforcement of FHA lenders,
including plans to publicly report lender performance rankings. The policy
changes are aimed at the small minority of “rogue performers,” FHA-approved
lenders who the agency believes operate outside its rules, he said.
The increased upfront mortgage-insurance requirement will take effect in the
spring. The new FICO score requirement and the change in seller-contributed
closing costs will take effect in early summer, the agency said.
mepodmolik@tribune.com
