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When to Consider a Rent-to-Own Arrangement

The purchase of a rent-to-own property is a great way to enter the world of homeownership. If you are either short of a full down payment and/or closing costs, or find yourself with credit challenges, this may be the way to go for you.

A rent-to-own program, which may also be called a land contract, is entered into by you and the seller/landlord. You live in the property and pay rent, with the option of purchasing. You’ll pay a deposit at the contract signing and you’ll both agree to a closing date when you will purchase the property. In some cases, the landlord will apply a portion of your rent to the down payment and/or closing costs, so you really have an incentive to make the program work.

Time frames


Time frames on rent-to-own agreements can range from a few months to close to a year. Buyers with a credit problem, such as a previous bankruptcy, may require more time to be able to requalify to purchase a property and will be at the longer end of the time frame. Another reason for a longer term would be to enable the purchaser to pay down debt so that his or her income ratios would then fall in line with lender requirements. 

Rent-to-own shouldn’t be lightly undertaken: On the agreed-upon date, if you haven’t closed, the seller could either determine what you need to do to complete the process and extend the date, or bring in a new tenant and keep your deposit.


Have an action plan


Ideally, before you enter into one of these agreements, you should be working with a mortgage professional to create a plan of action, so that you have a clear idea of what needs to happen. But whatever the case, rent-to-own programs offer opportunities that may not be available to you otherwise, and are well worth looking into.




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Kristine Weninger
Loan Officer NMLS ID 225608
836 Park Ave
Beaver Dam, WI 53916
Direct 920-960-0852
Office 920-219-4200
Fax 920-219-9987


Fairway Independent Mortgage

NMLS# 2289

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Copyright ©2018 Fairway Independent Mortgage Corporation. NMLS#2289. 4750S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.

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