Technically speaking, renting to own is always an option, but the real question is if renting to own is a smart choice in today’s market.  Most rent to own buyers today have experienced foreclosure, bankruptcy or some other financial set back that has seriously affected their credit and buying power.  Usually, because the banks or lenders won’t work with these buyers, the buyers have only the option of wheeling and dealing with sellers in a rent to own option.  However, if you have good credit, a steady job and there really is no reason not to just buy a property straight out, then rent to own is probably not the smartest way to make a home purchase.

The truth is that rent to own can cost you a lot of time and in the end a good bit of money as well.  The prices of homes today are lower than they have been in years.  Just because you are house shopping now doesn’t mean you are limited to purchasing one of the millions of foreclosure or REO properties on the market.  There are still conventional home sales happening all over the country and the foreclosure flood has helped to make even those properties more financially attainable for buyers.

It is actually the changes in housing market values that can make renting to own slightly riskier than it was several years ago.  Depending on where a potential property is located, the market in that area may still be on the decline.  If a buyer opts to rent to own and the property value decreases greatly during those first years, the buyer will be facing the same problem that many other distressed property owners face today-owing more than the property is worth.  

The other scary aspect of the rent to own option in today’s market is highlighted on the daily news.  There were recently four arrests that made national headlines for rent to own schemes.  You can never be sure that the lease payments you are making to the seller are going toward the home and not into the seller’s pocket or to one of those backward mortgages.  As a matter of fact, how can a rent to own buyer know that the seller is making mortgage payments at all? Worse yet, is when the property you are renting to own goes into foreclosure.  As a buyer, you are likely to end up losing your deposit and the equity you may have built up during your lease term. 

If you have been struggling to make the decision between renting to own and just buying, this is just a reminder that now is a good time to buy.  Banks are still making loans to people with good credit.  If your credit is a little shaky, take the time to contact a credit counselor and get it on the rebound.   In six months time you could be in good enough standing to get approved for a loan and in this market, you could easily get the house of your dreams at a price you can realistically afford.   This is also the best time to get a loan because interest rates are outstandingly low.  There are also incentives like the first time homebuyers credit, although this money does have to be paid back (interest free).  Lastly, the FHA and USDA Rural Development Loan are making down payments requirements extremely low.  Everything about the housing market points to buy, not rent for those who qualify. 

The real estate market has some excellent opportunities right now for buyers.  Renting to own may be a waste of valuable time and financial resources for some buyers.  Talk to a mortgage broker and real estate agent to see what might be the best option for you before you jump into any rent to own deals.