Rent-To-Own: Home Ownership Lite

We may be seeing a significant increase of rent (or lease)-to-owns these days due to the current foreclosure crisis in America. A rent to own property can give those who may otherwise not be able to obtain a mortgage, a chance at owning their own property. As with any financial undertaking, renting to own requires some critical thinking on the part of the buyer. Rent to own is also known as a lease option sale. The principle behind renting to own in real estate is that the tenant rents with the option to buy. Thus, most rent (or lease)-to-own tenants end up with both a rental lease and a purchase agreement. This ensures that both the owner and the buyer are very clear on what their rights and responsibilities are in terms of both renting and purchasing a property. The tenant pays the owner what is known as an "option fee" or "option money", which can be any amount. This is the first sticking-point. Unlike a down payment that you can get back with the sale of a house, option money does not generally go towards the purchase price and is seldom refundable if you decide you don't want to or can't buy the home. Your option money ensures that no one else can buy the home while the "option period" lasts. If you do not choose to buy the home by the time the option period ends, in most cases, the seller is then under no obligation to sell it to you, return your option fee or what is known as a "rent premium". The rent premium is the money paid above and beyond the rent price and, if you choose to buy, goes towards the purchase price, thus increasing your equity while you rent. This also provides additional incentive for both parties to stick with the plan. The buyer views the house as something other than just a rented domicile, and the seller can retain the extra money in the case of a default on rent or decision not to buy from the buyer. The buyer is not obligated to buy the property; a decision not to buy only means that the extra money spent is lost, but your credit is not affected. Rent to own sounds like an easy compromise between renting and taking on the financial responsibility to own and for some people, that's just what it is. There are people who have made this solution work for them while rebuilding credit and retaining a home they like. However, renting to own is also more expensive than obtaining a conventional mortgage. With a conventional mortgage, all of your money goes towards paying both principle and the interest on the loan. A rent to own means that only a very small percentage of your money goes towards the purchase price of the house. Also, the option money (which can be quite substantial) doesn't go towards paying the mortgage; it goes into the owner's pocket. A real estate lawyer is your best bet when considering the rent to own property. It is also important to get everything done on the property that you would do for a standard house purchase, such as a home inspection, appraisal, and any other inspections that are recommended. Sometimes the longest path is the shortest way to get what you want. Many people with bad credit have been able to achieve a decent credit score by paying off all outstanding debt, paying current bills on time, and avoiding incurring new credit debt. The time it takes to satisfy your creditors and rebuild your credit is also time you could be using to save up for a bigger downpayment on a conventional mortgage. Sometimes, the time spent on rebuilding credit for a standard mortgage will add up to much less time and money in the long run, as more of your money will be going into the house purchase instead of just the right to purchase within a given point. Starting Business with Bad Credit : Business is a type of occupation which many like. It is an occupation which gives complete freedom to the owner. No more following of the working hours. Work at your own pace and get the desired results. Yes, there is a certain amount of risk involved but what is life without risks? So you decide to start a new business. All the plans are in place. The concept of the business is good. Your product is in place. But there is something missing. Well, actually, the main aspect of the business is missing and that is, the money. Money seems to be hard to find by. And this is because your previous record shows that you are not competent enough with money matters. Your repayment history is bad. When you go to the bank asking for loan, your records scare the branch manager. Thus, to say it short and sweet, you simply don't have the financial backing for your business. So what do you do in such circumstances? There are quite a few steps that can be taken to get your mind back into your business. Firstly, there are three credit reporting agencies in the US namely Experian, TransUnion and Equifax. So approach all the agencies and get your credit report from all of them. Getting your credit report will help you analyze your financial situation which will make the process of solution finding for your problem a lot simpler. When doing the analysis, go through every report very carefully. Credit Bureaus make a lot of mistakes. There might be mistakes like a paid bill is market unpaid; someone else's credit card purchase is shown in yours, etc. In case of disputes, immediately contact the agency and get the mistake rectified. In case you are unable to deal with the credit reporting agency yourself, take the help of a credit repair agency. Also, you should make a business report to solve your credit issue at a faster rate. Also, with a business report, you get a license to go ahead with your business and at the same time improve your personal FICO score. Thus, a little while after you have implemented your business report, you can apply for business credit cards and other business financing options. Next, after getting hold of business credit cards, do not use them for personal uses. Never do it. Because this will just send wrong signals to your lenders and will worsen your credit record. Plus, your accountant and your attorney will also be left guessing about the disappearance of the funds. This is particularly harmful when there is a court case going on. Thus, bad credit is not such a bad situation. Even with a bad credit you can garner enough funds to start your business. But it is very important to use these new funds properly. These funds should primarily be used for business and business only. Following good habits will go a long way in improving your credit.