Rent To Own Home - What Rent To Own Is All About

Helpful Tips For When Looking For A House...

Especially when you're looking for a rent to own deal...

• Use basic Math! Calculate the total money you would be spending on the interest on your mortgage if you lived in the house for the full term of the loan. Many people find that they end up spending just about as much on loan payments, as they would on simply renting the place (though this is rare!).
• The Deposit - How much of the deposit do you have? Most people don't have sufficient funds to put down money on a house. This results in a mortgage insurance payment that is made every month as well. For a $700 payment a month, this insurance payment may be as much as $50. That's a LOT!
• Costs of repairs : Remember that once you own the home, you will need to spend quite a bit of money maintaining and improving it. You can end up spending as much $20,000 on a $100,000 home just in repairs that are part of routing fixing up over 5-6 years.
• Property taxes : Again, remember that being the home owner means that YOU will need to pay for the property taxes. This is an important issue that you must take into account. Many houses have around $2000 a year in taxes. Over 30 years, that's $60,000. Are you sure the house is worth it?
• Use an escrow service. This will help you manage all the different payments easily. This way, you only have to make one payment every month, and the escrow account will then pay out to insurance, property taxes, mortgage insurance and the lender.
• How much you can get out of the house: Add up all the costs, and then try and predict whether you will be able to get that money back when you sell the house. Add in the attorney costs, Realtor fees, closing costs as well.
  In the end, your total should include:
  What you paid for the house.
  What you paid in interest.
  What you paid in taxes.
  What you paid in repairs.
  What you paid in upkeep costs.
  What you paid in insurance.
  What you paid in mortgage insurance (if applicable).
  Any costs incurred for appraisal, inspection and so on.
  The Realtor commission, attorney fees, closing costs and such.
  
  Let's say that you paid $20,000 deposit, and after adding up, you will pay $900 a month in Escrow payments.
  
  Assume you are going to live in the house 10 years.
  
  That's $110,000 that you paid out of pocket. Add in 10% for repairs, which brings the total to $121,000.
  Now add this $121,000 to the remaining loan principal. Let's say that the remaining balance is $150,000.
  
  Do you think your house will be worth $271,000 at least in the next 10 years? While this is a very rough estimate, it helps. It you have serious doubts about the worth of the house, keep looking.