Rent, Rent to Own, or Buy?

My apartment's lease is up in February. I am looking for a place for just myself. I don't understand the whole process of buying a home/townhome/condo/loft, so the first thing I want to do is rent. But, people keep telling me I'm throwing away my money by renting.

So...what are your thoughts? What about the whole rent to own thing?

I'm on a bit of a time crunch. Is buying a home time consuming? If so, should I go straight for the rent to own thing or just stick with renting for now until I figure it all out?

Where do I start with owning my own home? Do I have to already have lots of money?

It is time consuming to buy the home/apartment/condo. Then there are ownership costs that you don't often see when renting.

One of the hazards, that sometimes pops up, usually not, in "rent to own" is that you don't own it, so you might not have anything to protect your investment in case of loss.

Renting may be as some of your friends say, "My rent receipts and a dollar will buy me a cup of coffee--depending on where I buy coffee." But that isn't all bad. A lot of people are being burned right now by treating their residence as an investment. Sometimes that works, and sometimes it doesn't.

Many years ago there was a revolution of sorts in the insurance business, where whole life insurance was being painted as the bad guy because the smart person would "buy term and invest the difference". The problem was that for all those that bought term insurance, they rarely invested the difference, so universal and variable life insurance was invented to essentially do that very thing. If you are renting but want to buy, figure out what the norm is to buy the kind of property that you rent right now. Set yourself a period of two to five, or even ten if you must, years to get that 10-20 percent down payment (if you don't already have substantial long-term savings). Then figure the difference between your mortgage and all those other expenses like taxes, maintenance, and the depreciation of things that need maintaining (a new roof every 10-15 years, new plumbing every 20, new carpet every 5, new paint every 5-10, new wiring every 15, etc.--then save money to replace them periodically) The nice thing is that you will develop an equity and what you pay for a residence will gradually become yours. But if you are 65, then a 30 year mortgage doesn't make much sense. If you are student at a small town college but going to move to get a good job at a big city upon graduation, then ownership may be a good piece of practical experience but not enough time to build up much equity to justify the effort.

Think about it. You may be just fine renting. Smile and fish out a dollar and say, "I guess I'll buy some coffee."

Right now, it is a buyer's market in the real estate market. Sellers are offering incentives, because the market is flooded with houses for sale. That being said, you need to have money set aside for closing costs which can run a couple thousand. You will also need to have money for things like paying deposits on water, electricity, gas, and property taxes. If you don't have a cushion to help you cover these costs, it will be hard to buy.

Do not rent to own! I worked as a foreclosure paralegal for several years, I can't tell you how many people I evicted from properties they were renting to own. Basically, what that means is that the owner of the house has the house in their name and the mortgage in their name and the deed in their name. You are paying the mortgage for that owner. But should the borrower fail to pay that mortgage all the time (and a lot of them are shady), then you will be evicted and there will be little recourse you can take because the bank will have the house and the old owner is not going to have the money to give you back the thousands of dollars you invested in a property which had your name nowhere on it.

Renting is not throwing away money. You have a place to live. Someone else is responsible for land maintence, maintence of the residence, and the taxes. You pay upfront fees and are never taken by surprise. It si a fine way to go, especially if you don't want to make such a huge commitment as buying a house because once that happens, you are stuck in a spot and in a mortgage until you sell the house, and that is hard to do in this day and age.

Also, if you are looking at condos. Be aware, there are monthly condo fees which are mandatory alogn with the mortgage. True, this pays for some maintence, but they are usually a couple hundred dollars a month.

A 100 percent loan - is not totally out of your reach - There are FHA programs, payment assistant programs to help you. Lenders look at your middle credit score (should be 580 +, to get 100 percent financing)

ALSO -
When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now - (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 - This is just a estimate - ok -

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thru a realtor, and the seller has to pay the realtor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far?? You may find a For Sale By Owner, they are sometimes more willing to help you with closing cost(s) associated with your loan, since there is no realtor fees.

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) FHA/VA approved too. If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.

Cost associated with your loan. You will need to pay for the appraisal up front (when it being done). You will need to pay for The Home Owners Insurance Coverage for at least 6 months (ask your lender), if you are escrowing (where it is added into your mortgage payment, than lenders normally want to see 1 year paid).

The seller can help you with up to 6 percent of closing cost. So the title fee, lender fees, underwriting fees, flood cert, etc can be paid for my the seller. Check your good faith estimate that I mentioned above.

Research on the Internet. Look at the MultipleListing Service to find houses you like in neighborhoods you're eyeing. This will also give you an idea of how much sellers are asking for listed homes.

Start interviewing agents (IF YOU GO THRu A REALTOR) so you'll have a good one when the time comes to start looking. Get referrals and select someone who knows your market and the neighborhoods you prefer. A good agent will notify you as soon as a home that fits your criteria goes on the market and stays on top of the listings on a daily basis and calls you the minute a good match shows up, especially in communities where homes are listed and pending sale in the same week, or even same day.

YOU CAN ALSO DO A FOR SALE BY OWNER - YOUR MORTGAGE BROKER WILL HELP YOU AND THE SELLER GET ALL THE INFORMATION NEEDED FOR YOUR LOAN.

Pin down the basics, specifically the neighborhoods you like that will accommodate your family's needs, including commute to work, schools, recreation, shopping, and, most importantly, are in a price range you can afford.

Have an open mind. It's easy to start looking at houses and get discouraged because you don't see anything that matches your vision of the perfect house. But be open to a home's potential. Remember carpet and flooring can be replaced, walls can be painted, and a dreadful kitchen can be updated. Think about whether the floor plan will work for your family.

Find a qualified inspector. You'll want to find a qualified professional affiliated with the American Society of Home Inspectors or American Association of Home Inspectors to examine your Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing. The inspector will provide a report and if there are any major problems, they can be negotiated with the seller. Or you can back out of the deal altogether

Make a list of features that are important in your home

Write down desirable locations you would consider, an acceptable price range, number of bedrooms and bathrooms, and any other amenities. Be specific. It is unlikely that you will find a home that offers every feature you desire; however, without a wish list, it will be more difficult to recognize a home that meets your expectations.

Provide the information to your Realtor

Your Realtor will look for homes that match your criteria. This will save you time â€“ you wonâ€™t need to look at homes that donâ€™t fit your needs and desires. Choosing the wrong home can become a costly mistake â€“ a home which is too large or too small for future needs; a fixer-upper when you are not handy; house that is too far from work or too close to traffic; home in the wrong price range.

A proper game plan will save you time and reduce the hassle of shopping for a home. Spend a little time in advance and save a lot of time and money in the future.

Thinking, â€œI canâ€™t afford a homeâ€

Many people feel they canâ€™t afford a home, but affording a home has never been easier. Mortgage rates are more flexible today than ever, and the tax laws favor home ownership like no other tax shelter.

Home ownership is a durable (real) investment. Although no one can say if a specific home will appreciate in value, generally speaking, the odds favor the homeowner.

Numerous unique tax advantages are available to homeowners. The thousands of dollars you pay in mortgage interest is deductible. This tax deduction alone can sometimes make owning your own home cheaper than renting with â€œafter taxâ€ take home dollars.

It may pay off to rent. People say there is nothing like owning but you have to add it all up (property taxes ins. etc) If the numbers make sense and you can get something at a good price then buy.
Another possibility, which would build your wealth, Is to buy say a 4 unit apartment building and live in one of the units. Then you have 3 other units paying for your mortgage and if you play it right, after increasing their rent in time, they will be paying for your unit too.
Then, sell the building in a few years and put your profits from the sale into a nice house where your mortgage is very low (because you made so much on the building sale)
It can be done ! I am an investor who has a lot of experience in all this . I also do loans for buildings and houses but I am not supposed to say that !

You can e-mail me for further guidance

Charles C artguy90291@yohoo.com

Renting I think is better b/c if your like me and you want to watch a movie for cheap and only because you will only watch it once anyways!1:)

You have a very vague question w/no details about amount saved, income, debt, home prices in your area. You clearly have many questions and learning everything in the next month is not the best for your situation. Try to find a place with a 6 month lease. If you are financially ready in 6 months, then you can search. Go to http://www.bankrate.com/brm/rate/mtg_home.asp to take a look at some of the calculators available. Rent vs buy, can you afford it?, etc would be things to look at.

First of all, if you're on a time crunch, it's a simple NO.

Buying a home or condo or whatever takes TIME. If you don't have the time, continue to rent. You need tons of time to find the right place at the right price, that fits your budget. You also need to time to prepare your documents, make sure your credit is flawless and your assets are seasoned.

There is a lot of preparation involved in getting a mortgage and finding the right home, so my recommendation is to continue renting, but maybe month to month while you look for a property that fits your profile.

Learn more about credit and mortgage:

http://www.thetruthaboutmortgage.com

It's far better to buy a home, the monthly note is paying off the house, where as just renting is basically a waste of money. Not too familiar with the rent to own stuff, just make sure that you don't have a balloon payment at the end. Best of luck to you.

Your comment that you are â€œa bit of a time crunchâ€ worries me because rushed people make bad decisions. You should not make any long-term financial commitments until you fully understand what each contract means to you.

I cannot answer which arrangement is best for you. Run the numbers yourself in a spreadsheet and find out which deal is best for your situation. If you are not comfortable with spreadsheets then find a nerd that you can trust to help you.

My general rule of thumb is that when being pressured into something, I sleep on it. It really helps to mitigate the risk of making a really stupid decision.

L.E.
do NOT BUY a house now, keep renting an other 6 or 12 mths. While you get Educated about buying a house. get 'House buying for Dummies' read it. visit daveramsey.com to learn what bankers/mortgage comps. pray you never ever learn. Cause right now you are the proverbial sucker the money changers would love to have their hands around.
there is a lot for you to learn about house buying. 1 thing might be - it isn't right for you.
the house 'tax benefits' aren't usable by some 77% of people with houses. translation - you spend 1000$ a yr for 250$ tax break that in truth you can't use. that's the house write off.
now when it comes to loans that is a can of snakes you don't want to open unless educated.
go with money and KNOWledge , not speed .

Buying a home is only as time consuming as you want it to be. If you are serious about buying, you should consult with a loan officer or bank first. They will be able to pre-approve you for a home loan and tell you how much your payments will be.

It is possible to get into a home with "no money down". Ask your loan officer and real estate agent about how to go about this.

After you have done this and decided on a purchase price you can afford, get in touch with a real estate agent. The agent will be able to send you listings complete with pictures of properties that meet the criteria you are looking for. You will be able to schedule time to view the properties when it is convenient for you.

After you find the property you want to purchase, your agent will handle all of the paperwork. It can take as little as two weeks to a month to close on the property. You will have the opportunity to negotiate a closing date.

In the meantime, your current landlord might be able to rent to you month to month if you don't find anything by the end of February. With month to month, you won't be restricted to living for a longer period of time.

If you are looking in or around St. Louis, MO, I would be more than happy to help. Visit us on line at www.RealtyPlusUSA.com or www.MortgagePlusUSA.com.

Good Luck!

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