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 11/22/09 the Jeffrey Packer RePage is ranked at 4,338 with 50 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.

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 11/22/09 the Jeffrey Packer RePage is ranked at 9,105 with 30 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 Brigham City, UT

Latitude: 41.510192 -- Longitude: -112.015011

Other Area Cities: Brigham City North Ogden Logan

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Brigham City is a city in Box Elder County, Utah, United States. The population was 17,411 at the 2000 census. By 2004 its estimated population had decreased slightly to 17,149. It is the county seat of Box Elder CountyGR6. It lies on the western slope of the Wellsville Mountains, a branch of the Wasatch Range at the western terminus of Box Elder Canyon. Brigham City saw most of its growth during the 1950s and 1960s, but has seen a struggling economy and stagnating growth since then. It is currently the headquarters of Thiokol, the company that created the solid rocket boosters for the Space Shuttle.Was the namesake of American movie director, producer, writer and actor Richard Dutcher's 2001 film Brigham City about murder in a fictitious small Mormon town. Due to geography and population, the movie was actually filmed in Mapleton, Utah.There is one high school, one middle school, one intermediate school, and five elementary schools in Brigham City, part of Box Elder School District. -- Source: Wikipedia.com

Utah 2000 Census Population Profile Map

	Brigham City	Utah	United States
Population	17,411	2,233,169	281,421,906
Median age	28.8	27.1	35.3
Median age for Male	27.7	26.7	34
Median age for Female	30.2	27.7	36.5
Households	5,526	701,281	105,480,101
Household population	17,091	2,192,689	273,643,273
Average household size	3.09	3.13	2.59
Families	4,410	535,294	71,787,347
Average family size	3.53	3.57	3.14
Housing units	5,838	768,594	115,904,641
Occupied units	5,526	701,281	105,480,101
Vacant units	312	67,313	10,424,540

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