Rent to Own / Owner financing

November 20, 2008

Just recently I talked to a home repairman. He was telling me how he’d worked for a builder for over 10 years and how he had an “agreement” to purchase a home from his boss. They’d agreed on a price ($23,000) and on an amount that would come out of his paycheck every month. But that was it. Nothing in writing, no mention of interest. The home was in bad repair and the employee spent long hours and money renovating the home. The builder refused to do any repairs as he told the employee that as a home “owner”, it was the employee’s responsibility. Fast forward 10 years. The employee had come into some money and wanted to pay off the home and get a deed. He had enough money to pay off the principle and enough left over to pay interest of 8%. The builder refused the payoff, stating that as the home was worth more now, he wanted an additional $20,000 but that if the employee wanted, he could continue paying monthly. Needless to say, that employee is no longer working for the builder and no longer living in the house he’d called home for over 10 years.

Many people with poor credit feel that a “rent to own” option will help them find a home. They think that it is similar to going to some of the “no credit check” rent-to-own furniture stores that are in every town. “I’ll pay $1000 a month and then one day I’ll own the home”. Yes, it is possible to structure a “rent to own” contract, but it is extremely important to lay out all contingencies. How much of the base rent will go towards principle? Who is responsible for repairs? Is there a default clause if the buyer leaves the home before the house is paid off? Will the buyer forfeit the equity or will he get some of it back? In the case of delinquent rent, will the equity be applied to delinquent rent and the purchase/rent to own contract be voided? Remember, in a rent to own situation, the tenant/purchaser does not have title to the property.

Owner financing is different. In this case, deed is passed to the buyer at closing and a mortgage is held by the seller. The buyer will sign a mortgage note and mortgage the home. The terms of the note will have been negotiated before closing. In this case, the seller is not responsible for any repairs to the home and must proceed through legal channels to foreclose on the property should the buyer default on the mortgage note. Most sellers are reluctant to owner finance to someone with poor credit, but if there extenuating circumstances, this might be an option for those buyers who are not eligible for traditional financing.

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Local Information for Casa Grande, AZ

Latitude: 32.885952 -- Longitude: -111.743851

Other Area Cities: Coolidge Casa Grande Arizona City Eloy Stanfield

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Casa Grande was founded in 1879 during the Arizona mining boom and became Incorporated in 1915. It was named after the Hohokam ruins at the nearby Casa Grande Ruins National Monument. A major railroad terminated in Casa Grande, which was originally named "Terminus". One of the founding fathers of Casa Grande was Thompson Rodney Peart, Went by the name of "T.R. Peart" Born in woods N.D. married to Lillian Cordelia Weaver.The Peart Center and Peart Road are named for T.R. The economy of Casa Grande was historically based on rural, agricultural industries such as cotton and dairy farms. Over time, the city has become home to many Phoenix or Tucson urbanites who own homes in Casa Grande. Most residents either commute north to work in the Phoenix metropolitan area or to the south to work in Tucson. This trend has contributed to growth in the service industry of Casa Grande. Many new businesses such as restaurants, gas stations, and retail outlets are opening all over the city. -- Source: Wikipedia.com

Arizona 2000 Census Population Profile Map

	Casa Grande	Arizona	United States
Population	25,224	5,130,632	281,421,906
Median age	32.3	34.2	35.3
Median age for Male	30.6	32.9	34
Median age for Female	34	35.5	36.5
Households	8,920	1,901,327	105,480,101
Household population	24,950	5,020,782	273,643,273
Average household size	2.8	2.64	2.59
Families	6,544	1,287,367	71,787,347
Average family size	3.24	3.18	3.14
Housing units	11,041	2,189,189	115,904,641
Occupied units	8,920	1,901,327	105,480,101
Vacant units	2,121	287,862	10,424,540

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