Credit-score-based mortgages were once the primary route to buying a house; however, these traditional methods of purchasing a home are becoming less common than in decades past. The American Dream is shifting and the concept of home ownership (while still strong) is evolving…
As banks tighten their loan approval processes, and many Americans are still digging themselves out from the effects of the recession (and possibly any credit problems they may have fell into during the recession), many buyers are turning to alternative means of purchasing a home due to perhaps the financial downfall of a credit score, or simply due to the fact that many buyers no longer hold faith in large banking and lending institutions that wreaked havoc on our economy through shady dealings and providing a windfall of loans to unqualified buyer/owners in the past. Many buyers today are seeking new channels to home ownership and learning about alternative means to purchase homes from private investors that live in and around the communities.
Renting apartments and houses has increased statistically in recent years… and renting-to-own a house (or Lease Options as many people call it) has become an increasingly popular way for families to buy a local Pittsburgh PA house directly from a seller (after a rental period that usually lasts 12-24 months), without the stringent and sometimes overwhelming qualification processes offered by banks.
There are many pros and cons of rent to own housing in Pittsburgh PA, which we will outline in this article.
It is important to read each detail of any agreement you approve, and consult with your attorney, financial advisor, or a rent-to-own expert if you have questions regarding any part of the process or any of the terms.
The largest hurdle to home ownership is typically qualifying for a loan for the house.
Since our last recession, many lenders have become more and more stringent with income and asset requirements to approve a loans. With the current state of the economy, many Americans cannot meet expectations for qualifying for homes. In a rent-to-own situation, the seller can determine the guidelines of approving the contract, and is often much more reasonable than traditional banks.
This means there is a much lower upfront payment to get into a house… and you do not have to navigate a complex process of qualifying for a bank loan.
Time to Improve Your Credit
As you are renting to own a home, you have an opportunity (usually 1-5 years) to rebuild your credit rating so you can get a home loan to buy that house at the end of the rent to own / lease option agreement.
While working on your credit, you will have the opportunity to live in your future home, and when the term has ended, you will have saved both a down payment and hopefully have increased your credit rating to get a traditional mortgage from a bank or private lender (Like the Seller/Landlord).
Rent Can be More Expensive
In a rent-to-own situation, including here in Pittsburgh and all around PA, the seller requires slightly more for a monthly payment due to the option to purchase the house that is included. If a buyer is decides not to purchase the home at the end of the term, or is unable to buy the home, they would have spent a bit more on living costs without the benefit of purchasing the home and building equity for themselves.
When you purchase a rent to own lease option, you need to be sure that you are serious about potentially purchasing this house at the end of the rent to own term… otherwise you are better off just renting a house through the normal rental channels.
Buyers must beware that there are risks involved with lease cancellation, eviction, and other factors when considering a rent-to-own home. If a buyer is late on payments or breaks the lease in any way, the option to purchase the home may be lost, and they will have will be subject to forfeiting any fees or additional rent they have paid for the ability to purchase at the end of the term.
The same goes here as in the first drawback… if you are wanting to rent to own the house… be serious about it and use the lease term to your advantage as it is as an opportunity to improve your credit, your credit score and your ability to qualify for the home you hope to own.
For many Pittsburgh PA residents who can not get a traditional bank loan to buy a house, the Pros and Cons of Rent to Own Housing In Pittsburgh are clear cut.
If you do not have the credit or do not have a huge down payment… but want to experience the feeling of “ownership” while you work on purchasing that house… looking for great rent to own houses in Pittsburgh may be the preferable choice.
If you are not fully committed to improving your financial situation, your credit, etc… doing a rent to own may not be the right fit for you and your family.
Rent to own is an attractive option for many Americans. By knowing what you are getting into, you have a prime opportunity to buy your dream home without meeting the often unrealistic standards set by traditional mortgage lenders.
If you have questions about the rent to own / lease option process works… we are here to assist and answer any questions for you!
Click the link below to see our available properties… or connect with us by calling us at (412) 900-8261 or through our contact page on this website.