5 Myths About Rent to Own

After I became a Realtor I found that a third of my clients were originally looking for a rent to own property. For some reason this myth that if you have so-so credit and little savings, a rent to own property could be your solution.  I soon found that couldn't be farther from the truth!

1.  Rent to Own is Cheaper than Buying a Home with a Loan.  Most rent to own properties are going to require that you put a minimum of 20% down.  If the house is $130,000, 20% would be $26,000.  Because you are not getting a loan, where the lender is offering the sellers a guarantee that you can afford their house, they ask you for more money upfront so that they feel secure that after the first year is up you will actually be able to purchase their home.  If you have at least a 620 credit score, and make under $62,500 annually, then you can qualify for a MFA loan which requires only $500 down payment.  If you make more than $62,500 and have a credit score of 620 then you can qualify for an FHA loan that requires only 3.5% down. ($4,550 instead of $26,000 for the same price of house)  See you're saving money already.

*Not to mention some rent to own contracts have you pay a large balloon payment after the first year when the deed is transferred in your name even after you've been paying them monthly.  

2.  You need perfect credit to Qualify for a Home Loan.  (See above, 620 is not perfect, but it will get you preapproved for a home loan).  Also some lenders will even grant loans with 580 credit score. Message me and ask me which ones.  Even if you've had a bankruptcy or a foreclosure you can still qualify for a home loan.    

3.  "I'm spending so much money on rent I would rather be investing in something that will be mine."  Purchasing a home allows you to do that.  Rent to own is not the only way to purchase a home.

4.  A mortgage is always more expensive than rent.  Most of the time your mortgage ends up being cheaper than rent.  Especially if you get a good interest rate, which are around 4% right now.  Also 5% percent down conventional loans allow you to avoid PMI which can make your monthly payments even lower.

5.  I don't know how to go about buying a home.  First find a Realtor, you don't have to pay us until you close, no matter how many houses we show you, we don't make a dime until we've found your dream house.  Also a good Realtor can get you in touch with a lender before you even find a house.  That way you know exactly how much you can afford with your income and which type of loan would be best for you.  There is nothing worse than found your ideal home only to be told that you can't buy because of financing issues.    

*Credit score not a 620 yet, don't worry there are easy steps to get you there.  

Contact me if you're looking for a house and rent to own suddenly sounds like a raw deal.  

Are You Ready to Buy Your First Home?

Buying your first home can be scary and overwhelming, mostly because it's hard to get a straight answer about what you can expect. Here are some quick tips to ease your anxiety and help you decide if it's time to stop wasting your money on rent and start building some equity in your own home:

1. FHA loans are not just for first time home buyers.

An FHA loan requires a 3.5% down payment rather than the traditional 5%, 10% or 20% down payment with conventional loans. In fact PMI rates are low enough right now that FHA is a competitive option when searching for the best mortgage.

2. No doesn't mean no forever. 

Remember if you don't qualify for a loan right away ask your lender what you can do to get into a home within the next 3-6 months. After looking at your income and FICO credit report, lenders will be able to tell you detailed tips about you can do to improve your score as well as get you into a home.

3. You don't need perfect credit to qualify for a home loan. A 620 Credit Score and an annual income of $62,500 or under could get you an MFA loan which gives you down payment assistance. Which means you would only need $500 for earnest money to place an offer on a home. There are other expenses that go into buying a home for instance home inspections. However these can be paid a number of ways. In most cases the buyer can pay at the time of the inspection or at closing (30 days later). In some cases we can even negotiate to have the sellers pay for it.

Whether it's a new home or an older home, remember it's not that scary if you have a qualified Realtor. Call me and lets find your first home.

Tax Return Burning Hole in Your Pocket: Use It To Invest

It's that time of year again, you're getting your tax refund! If you're thinking, YAY FREE MONEY, why not spend some of that money on a down payment for a house? 

Think about it, you're always going to need a place to live and tenting means living by someone else's rules. You want a pet? Too bad your landlord says no. You want your friend to move in? Too bad they aren't on the lease? Sick of your upstairs neighbors blasting their music at all hours? Or maybe you've outgrown your current place and fighting over bathroom space with your S/O is getting out of hand?These are all too common with apartment living or even when you're renting a house.

Why not buy? It's not as scary as it sounds and with government programs like FHA, and MFA you can get 3.5% down payments or even a $500 down payment as opposed to the usual 10-20% down payment for conventional loans. This means your tax return could be more than enough to buy a home. With even a little left over to buy yourself a house warming gift or two ;)

There is so much in the market right now.  Whether you're handy and want a fixer upper, there is foreclosure with your name on it. Or if you want new construction, where you can pick everything from your floor plan to your paint colors, I can help you find it.

Give a call (575) 521-1000 

http://www.coldwellbankerlegacy.com/valerie.day

Realtor In Southern New Mexico

Almost six months ago I decided that I was going to become a New Mexico Realtor.  I had read a half dozen books, interviewed/interrogated everyone I knew that had ever been, was, or even had thought about becoming a Realtor.  I wanted to know the good the bad and the ugly before I dropped a chunk of our savings into a 90 credit hours of real estate.  Once I was satisfied with my new found wealth of knowledge, I pulled the trigger, and  that was when I knew I could never look back.

As I barreled through my studies I realized that there was so much more to buying and selling residential real estate than I had ever assumed.  


There are so many laws and regulations that differ based on what state you intend to work in but there are also laws that mus be followed on a national level.  (Hence the reason for two exams.)   Also to my surprise there was quite a bit of math.

I have to tell you after I completed the 90 hours of study I have a lot of respect for those of us in this field. You have to know your stuff if you think you're going to succeed.  You have to be willing to go the extra mile for your clients and you have to understand that this is the biggest purchase of most peoples lives.  Even though this may only be a commission to you, this may very well be a life long commitment for the people that are buying a new home.  For the clients that are selling, they are selling much more than just a piece of property, they are selling a scrap book of their past.  

So if you don't think that you can be ethical, sincere, and complete math equations on the fly, real estate may not be for you, but on the other hand if you're looking for someone that is willing to do all those things, send me an email.

*Even if you're not in Southern New Mexico I can help you find another great Realtor wherever you are.