Housing prices have been steadily increasing, and many Americans wonder if they’ll ever be able to seize their dream of owning a home, especially if they have a low income. Being a homeowner is the American dream for many, but it can feel impossible if rent, utilities and other monthly expenses weigh you down. Fortunately, there are several steps you can take to become a homeowner, even if money is tight.
For example, depending on your situation, you may be able to take advantage of a rent to own contract or qualify for an FHA home loan or VA home loan. Today, we’ll take a closer look at low-cost home financing options that may help you achieve your dream of becoming a homeowner.
Lease to own homes provide an excellent way for renters to work towards homeownership. When you’re renting an apartment or home, you’re giving your money to your landlord each month to live there. In many cases, you are paying your landlord’s mortgage.
You’re not building any equity, and you’re not investing your rent towards anything other than having a place to live.
Unfortunately, it can be difficult for many Americans to qualify for a mortgage. Others may not be able to afford the down payment – a large lump sum that’s paid towards a home’s purchase.
If you do qualify for a home, a large portion of your mortgage payments will go towards the loan’s interest, not your principle balance. And if you barely qualify for a loan? You’re not likely to get the best rates, leading you toward paying more in interest over the life of the loan.
That’s why rent to own programs have become increasingly popular. When you have a rent to own mortgage, a portion of your rent goes towards buying the home. In the meantime, you can build your credit and down payment funds to later apply for a mortgage at the home’s lowered price.
As a rent to own first time home buyer, you and the homeowner will create a contract that outlines the purchase price of the home. This amount cannot go up or down, regardless of market changes.
Additionally, your rent to own contract will include other terms, such as the amount of your rent that’s put towards the home’s purchase, who is responsible for home maintenance and repairs, and so on.
There are many ways you can find genuine rent to own homes listings. One method is to look for the best rent to own home programs offered by realtors. Alternatively, some of the best rent to own homes are offered directly by homeowners.
Regardless of where you find a listing, always tour the property before creating a contract, just as you would when purchasing a home. It’s also recommended that you have an inspection done on the home to rule out any damages or potential problems you’ll face in the future, as these impact the value of the home.
Finally, you can get an appraisal done to ensure the home’s purchase price is fair and accurate. Never enter a rent to own program that does not include a detailed contract.
Unfortunately, there are many scams related to rent to own homes out there, and taking careful steps to ensure that an opportunity is the real deal is crucial.
