Post # 1
My siblings and I (including our spouses and children) all live within 30 minutes of eachother which happens to be three hours away from our parents.
We have been trying to convince them to move closer to us so they can see us and their grandkids a lot more (they are older -60’s) . They keep saying no because they are certain they won’t be approved for a loan- but that they would love to move. They don’t own a home now so they wouldnt be able to sell anything.
Anyway, so if they can’t get a loan to get a home, what about rent to own? Anyone know much about this? How does it work?
Post # 3
I’ve been doing a little research, actually. We would love to buy the home we’re currently renting. From what I understand, there’s a contract set in place that they intend to buy the home within a certain timeline, maybe 1-2 years, and the price is fixed at that point. There’s usually a down payment and/or a rent premium (5-10%) that goes toward the purchase price of the home. If your parents don’t buy the house, they don’t get that money back. Unfortunately, they will need to secure financing at some point. It’s possible that they could arrange an owner-financed home sale, but those deals would be harder to find.
Post # 4
I personally would advise against it. Basically you are trusting that you are giving your money to someone and that they are going to make your mortgage payment for you, and that at the end of this process-which could take years, they are going to turn a house over to you. I have yet to meet the person who did a rent to own, and ended up actually owning the house in the end. My sister tried to do this when she got divorced and it turned into a nightmare, when she realized that the guy she was doing business with was not making the mortgage payments to the bank on time, and that he used her property as collateral on another loan. In the end, she paid on this house for 5 years and ended up loosing it in the end. She couldn’t even sue the guy because he declared bankruptcy.
If you can’t qualify for a mortgage now, just rent the least expensive place you can find and pay off debts and work on improving your credit so that you can get qualify for a mortgage in a few years.
Post # 5
Thanks for the info ladies.
They’ve done soo much for all of us kids and worked so hard all their lives, it makes me sad they cant afford to move closer to us. I dont know their exact financial situation but she said very clearly they would NOT get approved for a mortgage. Ugh, I wish I were richer, I would buy them a home!
Post # 6
@sandythepoet – your poor sister! that sounds like a nightmare!
Post # 7
–I know this might not work for all families—
But have you and your siblings considered a)chipping in for a downpayment for them or b) cosigning so that they can get approved to be closer to family?
Just a thought.
Sorry, reread your post and I see that they rent now.
And if they already rent now why can’t they move and rent near the kids? Unless it’s a job issue?
I feel maybe you can help them find a home where the mortgage will equate what they pay for rent. With a little help cosigning/down payment from you & your siblings could be an option?
Post # 8
I knew someone who knew someone who would rent to own a home but, in the contract he had a portion where it basically stated they will never own the whole home. I would make sure a lawyer goes over all the paper work before signing any kind of contract. Best of luck to your parents.
Post # 9
I don’t really like the idea of them. Maybe they could just rent a place where you live? It sounds like they are renting now anyway. Home ownership isn’t the greatest sometimes when you are older and can’t take care of the place yourself.
Post # 10
I say don’t do it. It’s not really a great way to home ownership.
I would say contact a realtor simply to get some information. There are lots more ownership options for seniors that are opening up so the realtor might be able to give you ideas for how your parents can be closer to you.
Post # 11
Why not just rent? In a lot of markets, renting is waaay cheaper than buying. The rent-to-buy cost ratio favors renting for decades in some places – basically the rest of your parent’s lives. If they can’t afford the down payment/get financing, that could be the best option.
Post # 12
I studied this option in a real estate class I took in college, and basically all I remember from it is to stay far, far away. Basically it is like paying a mortgage every month, but if you miss a payment, you lose everything you ever put in. Apparently it is about as squirmy of a deal as those payday loan places.