Rent to own mortgages
In today’s tight credit market rent to own is becoming an ever growing trend. What a lot I people don’t understand that in certain cases like fha mortgages you cannot currently occupy your future purchase as a tenant. Today’s rent to own prospects are not as plentiful and they used to be but they are still out there.
The way they typically work is that whoever the owner is charges a certain rental rate and in return gives the tenant a credit of a specified dollar amount for the rental period giving the tenant a built up down payment. One important fact to consider if you end up as a tenant in that situation, by all underwriting rules, the landlord is only allowed to give you monthly credit above and beyond whatever fair market value is for the rental. For example, the market value for a condo your renting to own is $1200 and your rent is $1250, the bank will only count $50 per month as down payment money.
Always consult your mortgage consultant before entering into a rent to own option.