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.

As of 12/06/09 the Cynthia Thornton RePage is ranked at 2,997 with 70 points.
The monthly top RePage owner will receive a cash prize. Help this agent by bookmarking this site and posting it to blogs and other Web pages and encourage others to visit.

Local Information for Asheville, NC

Latitude: 35.579862 -- Longitude: -82.55581

Other Area Cities: Flat Rock Asheville Hendersonville Fletcher Black Mountain Arden

Enter our Photo Sweepstakes and Win $200 for your Asheville photos!

Click on Photos to Enlarge. To see all Asheville area photos Click Here.

Submit your photos of Asheville and become eligible to win $200. Click Here for details.

Asheville is a city in Buncombe County, North Carolina, and is its county seat. As of the 2000 census, the city had a total population of 68,889. It is the largest city in western North Carolina, and continues to grow - as of 2004, the Census Bureau estimates that Asheville's population is 70,400.[2] Attractive to hip and creative young people as well as to hip and creative retirees, Asheville has been listed in both Rolling Stone and Modern Maturity as an ideal place to live or visit. The open and accepting character of the city is evidenced by the many lifestyles and beliefs that coexist peacefully there. Asheville has been named the "most vegetarian-friendly" small city in America.[1] The art scene is especially active, and Asheville has become a mecca for potters, painters and musicians, with much of the current creativity inspired by the folk art and old ballads of early Scottish, English and Scots-Irish settlers. -- Source: Wikipedia.com

North Carolina 2000 Census Population Profile Map

	Asheville	North Carolina	United States
Population	68,889	8,049,313	281,421,906
Median age	39.2	35.3	35.3
Median age for Male	36.4	33.8	34
Median age for Female	41.8	36.7	36.5
Households	30,690	3,132,013	105,480,101
Household population	65,678	7,795,432	273,643,273
Average household size	2.14	2.49	2.59
Families	16,737	2,158,869	71,787,347
Average family size	2.81	2.98	3.14
Housing units	33,567	3,523,944	115,904,641
Occupied units	30,690	3,132,013	105,480,101
Vacant units	2,877	391,931	10,424,540

Visit US Census