Articles You Want » Mike Sumsky

Lease to Own vs. Mortgages

Mike Sumsky — Mon, 04 Jan 2010 21:00:54 +0000

As a prospective home buyer in the current market, you have several advantages and disadvantages before you. The good thing is the market has swung to the buyers side and there are many deals out there from motivated sellers. On the other hand, it has become very difficult for many people to obtain financing since banks have tightened up their lending criteria. If you don’t have good credit, your chances of getting approved for a home loan is very slim. Fortunately, lease to own options offer a popular way for you to own a home without having to qualify for a bank loan now.

As you are probably aware, there are very few benefits of renting, other than the fact that you don’t have some of the costs of owning such as property taxes or home repairs. Money spent on rent can never be recouped, and you’ll never benefit from the accumulation of equity if you’re just renting. While owning allows you to earn appreciation over time, how do you become a homeowner if you can’t qualify for a loan right now?

With a lease to own, you get to experience many of the benefits of home ownership. Under a lease to own agreement, you put down a down payment instead of a security deposit. Unlike a security deposit, this money has investment value, as it’s applied towards the equity in the home. The purchase price is locked in, so if the value of the home increases by the time the lease is up, you benefit by purchasing the home below market value.

Lease options are popular all over the Northwest, from Bremerton to Port Orchard and beyond. Lease to own options serve as a way for youth get a good deal on a home while giving you time to get your credit repaired enough to get a mortgage. It also gives you the flexibility to try before you buy, so you get the freedom of renting with the financial benefits that come with owning.

Washington Home Solutions is located in Port Orchard and offers lease opportunities to people who would like to own a home, but need time to get financing together and would like to explore lease to own opportunities. You can learn more at WAHomeSolutions.com.

Bookmark It

Hide Sites

Learning about Lease to Own

Mike Sumsky — Mon, 04 Jan 2010 20:59:52 +0000

Lease to own options are among the most attractive ways to purchase a house in the current market in Bremerton. A great many homeowners found their finances devastated by the fluctuations in the housing market in 2007. Mortgages adjusted, home prices dropped, and many people found their home ownership dream turned into a nightmare. With the real estate market continuing to fluctuate like it is, many prospective home buyers are looking for ways to limit the amount of risk to which they’re exposed to. Buying a home on a lease to own option allows buyers to do this, and at the same time, usually enables them most of the benefits of home ownership.

With a lease to own, you have a portion of your payment which is applied towards the purchase, usually between $150-300. You can also make improvements to the home, and any equity gain that you create is yours to keep if you purchase. If the market appreciates during this time, you’ve got a double bonus. On the other hand, if the market drops, you are not stuck with a house that you owe more than it’s worth, since you’re not obligated to buy the house if you don’t want to.

This option to buy is secured by a down payment made at the start of the lease. Of course, you may have a hard time with the down payment required for any home and, thus remain a renter for a very long time. With a rent to own option, you can oftentimes make the down payment in ways that are much easier than coming up with a large percentage of the home price. Sometimes the down payment can be made in installment payments, or if you happen to have some home improvement skills yourself, or are willing to invest in the services of a contractor, many leasing individuals and firms will allow you to do work on the house instead of a down payment. In some cases, you will be able to trade objects of value in lieu of the regular down payment cost. Borrowing the down payment funds is usually fine for lease options, as well.

For the duration of the lease, you will be paying the homeowner in a similar fashion to how you would normally pay rent. The difference is that you’re making an investment in a home.

If you’ve felt there was no way for you to purchase a home, you may find that using a lease to own option presents a viable, and potentially profitable, way to get a house in Bremerton.

Bookmark It

Hide Sites

Improving Credit before a Home Purchase

Mike Sumsky — Mon, 04 Jan 2010 20:58:36 +0000

You may find yourself wanting nothing more than to own your own home but still prohibited from doing so by a bad credit score. Lease to own options may offer you more flexibility in this regard than do regular banks, but you will usually be expected to put serious effort toward improving your score once you sign the agreement.

In either case, it’s always better to get financing when you have good credit on your side.

The first thing you must do is bring your accounts into good standing. On any account that has installment payments, this means paying any past due amounts and making the current month’s payment and staying current thereafter. Doing so will begin the process of raising your credit; missing and late payments will instantly destroy your credit. Any outstanding debts that aren’t installment accounts should be paid off or have a payment arrangement made for paying off the entire amount. After all the bad spots are patched over, the only thing that remains is to limit your borrowing to sensible levels.

There are some very easy ways to improve credit and do it without having to rent for a long time. Lease to own arrangements are a great way to do this. There are many homes available for lease to own in the Bremerton and Port Orchard areas.

With a rent to own, you can move into the home that you will ultimately buy and have a portion of each payment go towards the purchase. Usually you will be required to put down a small amount of money, called ‘option consideration’. This payment will apply to the purchase as well. The most important part is that you can treat the home like it’s your own, and you’ll get out of the cycle of paying rent and having nothing to show for it.

By the time you’ve improved your credit enough to get permanent financing, the real estate market may have even gone up, and since your purchase price is established at the beginning of the lease there’s a chance that you can have instant equity when you buy.

Bookmark It

Hide Sites

Getting out of Renting

Mike Sumsky — Mon, 04 Jan 2010 20:53:39 +0000

Renting does have some advantages. If it didn’t, no one would do it. The disadvantages of renting, however, are many and significant. The first, and most obvious, is that the money you spend on rent is essentially thrown away. The money is not tax-deductible, in most cases, and gains you no equity in the property in which you live. Another disadvantage is that renting offers little say over how you arrange, decorate and modify your home. Your home or apartment, of course, belongs to the landlord and they, ultimately, get the last word on any changes.

For most individuals, the obvious alternative to renting is buying a home. The intimidating amount of money, process of getting financing and other hassles of purchasing a home keep many individuals from even bothering to try. There is something in between, however, that allows you an opportunity to establish yourself in a house without taking on all of the financial responsibilities. These lease to own options, as they’re often called, offer you an opportunity to get out of renting without the difficulties usually associated with getting a mortgage.

Lease to own arrangements are often offered by real estate investors who want a better quality tenant who will ultimately buy the home. These individuals allow clients who may not qualify for a mortgage to get into a home. The way the arrangement works is that you pay a down payment on the home and then sign onto a lease. The lease contains the option for you to purchase the home, at a price that is locked in from the beginning. This means that, if you live in the home for two years and the market improves significantly, you may purchase the home at the price that is much lower than market value. In markets such as Port Orchard and Bremerton, this can mean significant profits.

A great deal of the expense associated with home ownership is eliminated under these arrangements. Instead of paying a large mortgage payment every month, plus taxes and plus insurance, you merely pay your lease payment, and a portion of the payment will apply towards the purchase. You are not liable for the taxes on the property until you actually purchase the home. Some of the individuals who offer these arrangements will also allow their clients to pay off their down payments in several installments, reducing the financial burden of coming up with that amount of money all at once.

Bookmark It

Hide Sites

Getting a Home in a Tight Credit Market

Mike Sumsky — Mon, 04 Jan 2010 20:52:31 +0000

The credit market of today is tougher than it has been in years. Several years ago it was easy to get a home loan, even if you had bad credit. Now, the pendulum has swung to the other side, and it’s almost impossible to get financing unless you have great credit, long-term work history and plenty of down payment. This makes it very difficult for many people to get into a home of their own. It may be a buyer’s market from the perspective of home prices, but the credit markets make it remarkably hard for you to get funding. Other options and other financial products are available, however.

A rent to own agreement is one under which you pay a smaller down payment to move into a home but gain another benefit from having a portion of your monthly rent payments being applied towards the purchase. There are many lease to own homes in the Port Orchard and Bremerton areas and the benefits don’t stop there.

The best part is that it gives you the opportunity to work on improving your credit situation while you live in the home that you will ultimately own. No more throwing your money away towards rent, and running the constant treadmill that so many people stay on.

The home price will usually be locked in when you began paying on your lease, so you can earn a potentially great benefit if the price happens to go up before you buy. At the same time, if the market value goes down, you are not committed to purchase, and you can often buy the home at the lower price.

The arrangement is also generally much cheaper than the monthly cost of a mortgage. Because you don’t actually own the home until you exercise your lease option, you pay no taxes on the property, cutting another cost.

With all of the benefits of a lease to own, it’s a surprise that more people don’t take advantage of the opportunity.

Bookmark It

Hide Sites

Buying a Home With Bad Credit

Mike Sumsky — Mon, 04 Jan 2010 20:51:23 +0000

If you’ve found yourself in a situation where you’ve been late on your bills or credit card payments, you’ve probably discovered that your credit rating has been hurt as well. One of the challenges of having poor credit is that it is often difficult for you to get loans and future financing, especially when it comes to a new home loan. With the economy the way it is, many people have found themselves in this situation, and think that it’s impossible to buy a home. Fortunately, there are ways for you to purchase a home that don’t involve directly taking a mortgage or dealing with a bank.

One of the ways that you can become a homeowner even though you may have be credit is through a ‘lease to own’. These work a bit differently than a standard mortgage, but often have several advantages versus purchasing a home outright, such as the ability to “try before you buy”. In many regards, they serve as a way for you to avoid falling into the traps which so many homeowners have fallen in the last several years.

With a lease to own option, you put down an upfront payment called “option consideration”, and sign a lease. The down payment secures your right to purchase the home at the end of your lease. Also, a portion of each monthly payment usually applies towards your purchase as well. If you don’t have much money saved up for a down payment, you can sometimes work out an arrangement to trade “work for equity” or even items of value such as vehicles or other objects of value in lieu of a down payment. Benefits such as these make lease to own a good deal for those with bad credit.

While purchasing a home will never be as easy for someone with bad credit as it will be for those with excellent scores, there are ways that you can get around the obstacles of buying a home. Finding a good lease to own program may be the best way for you to get into a new house and go from renting to owning.

Bookmark It

Hide Sites

Buying, Cheap, Unlisted Homes in Port Orchard

Mike Sumsky — Mon, 04 Jan 2010 20:49:02 +0000

While it’s usually portrayed as part of the dreams of most working individuals, not all homebuyers are looking for their fantasy homes. Some buyers are looking for a good investment to make a profit, or even to buy a home with instant equity to live in. The recent downturn in the real estate market has created a tremendous opportunity to buy real estate at a fraction of the prices that homes were selling for several years ago. While you can find some decent deals by looking at homes that are listed by Realtors, there are often better deals available. This takes some help, in some cases.

Those individuals who invest in the real estate market and who do so with cash can always get the best deals. After all, they can close quickly without having to go through the loan approval process. Sellers are oftentimes willing to accept significant discounts for a cash buyer or an investor.

Finding the deals is often the hardest part. It usually involves spending day after day in the trenches, searching for that one property out of thousands that the seller is willing to accept a big discount on the sales price in order to have a fast, cash sale.

There are a handful of real estate ‘wholesalers’ who spend the time and energy looking full-time for these deals and pass on the deal to an end buyer. Their compensation is usually for a modest wholesale fee, but the benefit is that you, the end buyer can purchase a home for as much as 30-50% below the appraised value.

With the assistance of an investor who knows the Port Orchard market, you’ll be able to find great, non-listed real estate deals that you can purchase well below market value.

Bookmark It

Hide Sites

Buying a Home With a Small Down Payment

Mike Sumsky — Mon, 04 Jan 2010 20:47:40 +0000

Many people would like nothing more than to buy a home in Bremerton or Port Orchard, but lack a large down payment. Even if you don’t have bad credit, coming up with a sufficient down payment to get a loan is often the stumbling block that can stop you from buying a home. FHA loans will require at least 3.5%, and conventional loans much more, up to 10-20%.

There are some options, however, that can allow you to stop cycle of renting and finally move into the home of your dreams. Purchasing a home on a lease purchase arrangement is one such option. This is an excellent option if you have a steady income but don’t have a large amount of money in savings or simply set aside to make a down payment on a house.

The most important thing is that you have steady income to make monthly payments, and that you have a reasonable amount saved up to put down. Usually a few thousand dollars is good enough to get started. During the lease period, a portion of your monthly payment is usually applied towards the final down payment you’ll have for your home loan. Building it up over time allows you to ease into home ownership and get out of renting forever.

If you’re a little short on funds, some sellers are willing to allow you to move in if you promise to make some improvements to the home, or even trade items of value such as a car, boat or ATV in lieu of a down payment. such arrangements make it much easier for you to get into the home of your dreams without the usual obstacles.

Bookmark It

Hide Sites

Buying a Home in Bremerton after Foreclosure

Mike Sumsky — Mon, 04 Jan 2010 20:44:58 +0000

Like any community in the northwest in the last couple of years, Bremerton has had its share of economic ups and downs. Many individuals took their hardest hit in terms of their home when during the real estate bubble of the 2000s, put most of their investment into their homes and saw the value of all they’d worked for plummet by the end of 2007. Many individuals ended up selling their homes for much less than they were worth. Still others found themselves without a home at all. If this describes your situation, there are ways for you to get back in a home, sometimes with better options than at the height of the bubble.

Having a foreclosure on your credit does not ruin your chances of owning a home forever, and it doesn’t mean that you are destined to rent for years on end. Of course, it will be very important to start building your credit score. Making on-time payments on all of your obligations and paying down debt will be key to your road to home ownership again.

If you don’t have a lot of other late payments other than your previous mortgage, figure about three years until you may be able to qualify for another loan. In the meantime, establish a good payment history again, and look for a home that you can lease to own.

A lease to own arrangement will give you the opportunity to live in the home you will ultimately buy while building your credit rating. In addition, a portion of each monthly payment will go towards the purchase. Just make sure to find a lease to own arrangement that gives you plenty of time to get approved for financing. A good mortgage broker can advise you based on your situation.

You’ll get a chance to lock in the price of a home from the day you move in. This means that, if the value of the property goes up, you can purchase the home for less than it’s worth. In the meantime, you are not responsible for the tax payments or other aspects of homeownership which may be prohibitively expensive for you. This option allows you to make an almost instant profit if the market happens to climb. If not, you stand to lose nothing except the wasteful lifestyle that you had while renting.

Bookmark It

Hide Sites

Moving to the Northwest and Homeownership

Mike Sumsky — Mon, 04 Jan 2010 20:41:03 +0000

The northwest is one of the most popular places for those seeking to relocate. It’s no wonder why. The area is home to some of the largest tech companies in the world. It is also vibrant and diverse and offers a great deal of natural places to explore. Since prices of real estate have dropped considerably during the last several years, there are many opportunities to buy at very low prices.

Communities such as Bremerton and Port Orchard present good examples. It’s an easy ferry commute to Seattle, yet homes can be purchased for about half the cost of the big city.

But what if you can’t qualify for a mortgage? Well, the good news is that you can still take advantage of the low home prices. Lease to own is one such way that you can do this. If you need time to qualify for a mortgage, find a seller or investor who is offering their house for sale on a lease to own. You’ll have the ability to lock in the price of the home when you move in, and you can build equity as you make lease payments.

You make a down payment, called “option consideration” on the home when you move into the residence. This payment is applied towards the purchase of the home.
Also, a portion of each payment is applied towards the purchase as well. By going this route, you get almost all the benefits of home ownership without having to qualify for a mortgage today. Also, you’ll probably find that the lease to own payment will be cheaper than a mortgage payment because you are usually not responsible for paying property taxes, at least until you ultimately purchase the home.

Buying under the terms of such an arrangement, you can make it a much easier affair to relocate to popular areas such as Bremerton and Port Orchard. For some individuals, this is the single best option, as being a leaser provides some insulation from the volatility of the market, just in case we haven’t seen a bottom on real estate values. Finding a good investor who offers this option to individuals is an excellent option, especially for those who have poor credit. In many cases, it has the end result of acting as a hand up, allowing you to get back on your feet in the financial sense.

Bookmark It

Hide Sites