Buying Tips

What is Rent to Buy Housing Scheme?

Many sellers in today’s world are offering rent to buy housing schemes. New ways are developing day by day to sell as many homes as possible. These kinds of schemes work like hire and purchase schemes. The seller allows the tenant to move in their dream homes and the tenant starts paying the rent for the same home in which he want to live. So the tenant gets his dream home by the use of rent to buy housing schemes. The scheme is like try before you want to buy a certain home. It gives an idea of the house and the ambiance it provides.

It is like an agreement of lease and the individual has to fulfill all the necessary rules and regulations. The buying time can vary from three months to ten years. The price of the property is fixed when the agreement is signed and when that money is paid then the house will be handed over to the tenant. The whole scenario depends on the market. If the house price rises then it can become difficult to pay that price and everything depends on sheer luck. Most the times the prices of the house are steady and constant but sometimes they can vary according to many different scenarios.

Many people look at the houses as an investment scheme. They buy the houses through the rent to buy housing schemes. But this can prove as a potential risk because house prices might go down in the future. Home ownership is good but it comes with a load of responsibilities too. House is a shelter which provides a place to hide the individual from the outside world. It is not an investment at all. If a person misses the mortgage payment then they are in a condition to lose the house. However, if the finances are good then this situation can be averted. The time when all the installments are paid then the real cost of the house becomes half that of the original cost. Renting is not like wasting the money but it is like investing the money in a good manner. A renter does not pay interest to the concerned bank and in return the interest is paid to the owner of the house.

Thus, the rent to buy housing scheme becomes an important factor if the concern is to try a house before buying it. It provides full ease of access before going to buy a house and also provides a prototype for a real ownership experience! The rent to buy housing technique is not for a long term use and the day will come when the full payment has to be paid and the house will be given to the tenant. The tenant will become the landlord after all the formalities.

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House Buying Blunders And How You Can Avoid Them

Let’s face it, it seems almost impossible to learn everything there is to know about the home buying process.

In this article we will look at some of the mistakes that can be made and how you can avoid them.

There are so many tasks and details that it’s easy to become lost in all the information you receive about the process.

Sometimes you don’t realize a home buying mistake until you’ve made it. Here’s a list of home buying mistakes that could be made by anyone, first time buyer or tenth time buyer.

Using the inspector recommended by your agent. Sure, it seems like your real estate agent only want to provide you with the help you need. That’s why you hired him, isn’t it?

Just because your real estate agent is helping in the home buying process doesn’t mean you have to take his suggestions on the professionals to use in the process. In fact, it’s probably best if you choose your own inspector.

You never know what kind of relationship the real estate agent has with the inspector and how that relationship impacts your purchase decision, which is why it’s best to find your own. That way you don’t have to second guess who is helping whom in the real estate transaction.

Listening to advice about what you can afford.

Don’t be surprised to receive advice from your agent, your mortgage broker, and your lender about what you can afford to pay for your mortgage.

Just because these professionals have experience in working with borrowers doesn’t mean they know your financial situation better than you.

This is why financial preparation is so important to home buying. You need to understand your budget and know how much you can afford to spend a mortgage.

Don’t let anyone talk you into spending more than you are comfortable spending.

Opening or closing credit accounts. Either of these actions will have an affect on the all-mighty credit score, which is used by lenders to determine your credit risk.

If you make a change to a credit account it could change your credit score in a way that causes you to pay extra in interest, or even worse, be denied for the home buying loan.

Leave the credit cards alone, at least until you’ve been approved for the mortgage. Then you can open credit accounts at your discretion.

Not investigating the neighborhood. This is the place where you are going to be living for the next 15, 20, or even 30 years. Shouldn’t you find out as much information as you can about it before ending the home buying process?

You should visit the area at different times of the day to get a feel for what goes on throughout the day.

Interview some of the neighbors on how they like the area and the direction they feel it’s going.

You’ll likely find out a ton of information your real estate agent couldn’t give you because of fair housing laws.

Of course you want your home buying process to go as smoothly as possible. Some home buying mistakes might be unavoidable, but you should always take steps to prevent the big ones from occurring.

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The Home Buying Process

Many a home buyer has wondered in the midst of their looking chaos- Is this how it is done because this is exasperating? Well to help buyers figure out that the information overload age need not apply to them when looking for and in buying a house, we have detailed the Buying Process for better peace of mind below… less chaos. We will assume for the purposes of this article that you are buying a home, but much of the same advice might apply for any kind of property. This article is written in a state where real estate agents handle real estate transactions, so realize that in some states or counties an attorney is required. Check with you local state officials for any differences that may pertain. Information in this article is not guaranteed to be reliable regarding differences that may exist in different states.

1. Become Educated

If you don’t contact a realtor first, do at least take time to get educated both about the real estate values by shopping online and about getting pre-qualified with a mortgage lender.

Maximize your opportunities to find the right home by eventually sharing your property wants/needs and timeframe with a realtor.

Your realtor can:

Direct you to competent and reputable mortgage professionals to establish your comfortable home buying price range.

Help with advanced search methods or tools.

Help you to understand neighborhoods and home features and their value in today’s market, as well as relevance to your buying needs.

Conduct information gathering and research on specific properties for you.

Create a venue for home buying advice and counseling.

Discuss current market conditions.

Commit to your agent of choice for the best professional service because commitment reciprocates commitment and genuine service, which is maximizing your opportunities.

2. Get Pre-Qualified

Finding the right mortgage lender or bank can be trying. Often times a good realtor will give the best recommendation. While finding a reputable lender to help you establish a comfortable shopping range is always a first recommended step, you do not have to settle on a mortgage lender or bank just yet. But the sooner you know just how much house you can buy, the less time it will take to pinpoint homes that truly meet your needs and budget!!! Also, don’t forget the energy and possible long hours saved from shopping around for homes that don’t meet your needs and budget. Everyone that is sensitive to an economy based on effective use of time and information has experienced getting the ‘food yanked out of their mouth’- this may be no less painful if you completely go it on your own. Insist actually on a pre-approval to include some of the items in #4 below.

Your lender will:

Check your credit.

Determine your debt to income ratio.

Discuss which mortgage product best fits your situation.

Provide a Good Faith Estimate, showing you what your closing costs would be.

Determine what purchase price you qualify for.

Write a “Pre-Qualification” (Pre-Approval if you take extra steps) letter that strengthens your offer on a home or property.

3. Find Your Dream Home

After becoming pre-qualified or pre-approved with a lender, it is time to find a home that truly meets your needs and budget.

Use a local realtors office or internet property search solutions to access “All the Listings”. You can do this by typing into the internet the name of the city (and state, if needed) followed by the words “real estate”. Most local county boards will control how much data gets released onto the internet. Most realtor sites will “serve up” some version of the local Multiple Listing Service containing all the listings. There are also some bigger 3rd party conglomerates that are competing to serve up the data more centrally because of how the information gets withheld or released and based off referral power revenue (to agents) that can be generated. Occasionally, the question of reliability in which the 2nd or 3rd party data gets delivered up, will leave that property search less desirable. Typically, these entities get property data either direct or in a “feed” from the local Board of Realtors in that County. If it’s a direct line, then data can be deemed “real-time”. If not, usually a day or two lag time of new listings going on will be rendered at your interface point of contact search solution. Also, many entities that serve up the data do not have a very friendly search interface console. Most people search until they can find one or two solutions they like. The bigger conglomerates compete with how you as the end user will eventually be connected up with which realtor. Both realtor and conglomerate may compete with the need to withhold enough information to still be able to entice you enough to get your contact information. Often times an individual realtor’s site will give out more data on listings than the big conglomerates because they already have some security of possible representation of business. Each may be earning some of your business and this is how they hope to get to be the ones to represent your real estate interests.

Get set-up on Email Updates if that area has them. Email updates are when a new listing comes onto the market matching your criteria and you get a reference to that listing freshly emailed to you with all pictures and data relative to that new listing.

Select those homes or properties that are of interest.

If possible drive-by the listings to become accustomed to the neighborhoods, styles and curb appeal of your preference homes.

Let your realtor know which ones that you would like to see or know more about and he/she will research the homes you have selected and set appointments for those you are interested in. Please note that the realtor will have showing instructions on each listing you select, which may or may not accommodate your desires of seeing it “right now”. Depending on areas, sometimes a Key-Box will be attached to the home as a way for your realtor to access the home when an appointment was not able to be secured. If this is the case, there is usually still a courteously call to the Seller that is appreciated protocol, so give your realtor some ample time a day or two, if you can, to line things up. If in an area, likelihood abound that many homes of the homes selected are on Key-Box, then less time is required and in some cases immediate showings can be arranged.

Now, your realtor should be competent enough to guide you through getting an offer written and accepted, after which you may need to immediately start on getting a loan.

4. Getting a Loan

Since, the market has been hit hard by the sub-prime market, many people and even Lenders are in a quandary over what is going to surface as the “real deal” in Lending money. Can you look far enough forward and perhaps think about becoming pre-approved, which is stronger than pre-qualified, even before you go shopping? I hope so, because the below is what you are looking at and why do this after all that house hunting work, only to find out you have wasted everybody’s time. Not the least to mention is the seller having had to take their house off the market with no compensation… when you may have been able to save yourself and your realtor all that running around by figuring out first, if you can really get a loan. These are some of the basics you will need in order to obtain financing.

Proof of Income

Employed – 2 year tax returns or W-2, 1 month pay stubs

Commissioned -2 year tax return including 1099 or W-2 and pay stubs

Self Employed – Federal tax return, profit and loss statement, 2 years balance sheet

Retired – social security awards letter

Other income

Rental property – copy of lease

Alimony or Child support – copy of Divorce decree

2 months bank statements

Driver’s license

Social security card

Home Owners insurance information

Bankruptcy information

Proof of Earnest money check

Your lender will:

Verify your information meeting the criteria for the loan

Prepare all the required documents and verifications

Upon a valid contract, submit your package with the appraisal to the underwriters (who re-verify and give approval to release funds for this transaction)

Handle last minute conditions from the underwriters

Once all conditions have been met, the loan is released from Final Underwriting and the true lender is committed to funding the loan.Your realtor or attorney can be checking in with your mortgage lender or bank as performance dates grow close. Such dates might include making sure ny appraisal condition or loan denial deadline is on schedule to be met. Thus, you, your realtor and lender should be working hand-in-hand to ensure that the loan details are being handled and remedied as needed.

Many a home buyer can breathe a sigh of relief knowing that if you follow the “yellow brick road”, along the home buying process that it will land you a home… and there is no place like home!

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