As a Real Estate Broker in Manchester, New Hampshire, Every day i get calls or emails from potential home owners who can not get a mortgage now for properties in Southern NH, Central NH and Seacoast NH that would like to use a "Lease/Purchase" also known as the "Rent to Own" concept to obtain home ownership.
If you are looking to rent to own a home, here are some tips to get you started.
The first step: Get Prequailified...
The first step is an absolute MUST, it is to get prequailified. Meet with a local and trusted bank or mortgage company. Stay away from internet lenders. You need to find out how long it will take you to get a mortgage so you know hown long of a lease your need. As well as what you will need to do to be quailified by the time that lease is up. You can get prequailified at no cost at most trusted lenders.
Then you need to know what price range you will be able to purchase in. you do not want to lease a home out of your price range as you may never be able to purchase it.
Second step: Look at properties within your price range...
You may not have the resources to find the properties that are not being offered as lease purchase already. Your next step should be to work with a buyer broker in the area you are looking, they can search rental listings and ask the owners or listings agents on your behalf if they would be willing to complete a lease purchase. A buyer broker gets paid when the lease is consumated and then a commission when the sale closes, they should not charge you anything else for their service.
As rentals are at a low right now, the other place to look is houses on the market for sale that are not selling. Your agent could contact the listings for sale to see if they are in a position to lease purchase the property.
Third step: negotiate the lease and purchase...
Once you find the property you need to negotiate both the lease and the purchase part. First the lease, make sure the lease is as long as the time the bank told you that you need to get a mortgage. Make sure the monthly rent is at or below market rent, dont overpay.
For the purchase you want to negotiate your price, make sure your agent lets you know what the house is worth in todays market. For the option part some sellers will want a deposit for the purchase. you will want to make sure they are crediting to you part of the monthly rent you are paying towards your down payment and closing costs. Shoot for 8% of the purchase price divided by how many months you are renting. 5% covers your down payment and 3% covers your closing costs. Now if you do not purchase, you do not get any money back or any credit.
Now that you have some knowledge and direction, you can go forth and look for your dream home.
A note to HOME SELLERS:
IF YOU ARE A SELLER who is considering offering a lease purchase, make sure you outline the lease and the purchase seperately. You should state in the contract what happens if they do or do not purchase, and if they do not purchase, how much notice do they need to give you and do they get their deposit for the purchase back.
If you are a home owner looking to sell, rent or rent to own your house in NH, please call me first for the best personal and professional service.
UPDATED July 12, 2011
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