Can You Do A Rent To Own With Or After Foreclosure?

A question I hear often here at MN Rent to own is:

Can I do a rent to own after a foreclosure?

Yes you absolutely can and you should. A rent to own is actually a perfect solution to get back on your feet and on the road to home ownership. Why go back to the straight renting world for a few years when you can do a rent to own immediately and get the benefits of monthly rent credits and locking in the purchase price on a your new home.

While it is good to do a rent to own with a foreclosure on your credit file there are a couple of things you should keep in mind.

The main item of concern is the end financing solution. As with any rent to own your main end goal is to obtain your own financing. In all my conversations with Lenders and mortgage brokers it is apparent that with a foreclosure on your credit record most lenders want to see at least 18 - 24 months from the foreclosure date (sheriff sale) before they will offer home financing.

The next item should go with out being said but is one of the keys for obtaining financing after a foreclosure. You must pay your bills on time. Lenders want to see that you have been responsible and have been able to pay your bills with little problems.

The final item is that it is critical that you take an active roll in your own credit repair/maintenance or enroll into a credit repair/maintenance program. If you do credit repair/maintenance yourself make sure you stay on top of this diligently. Your other option is to work with a reputable credit maintenance agency such as http://www.creditrestorationltd.com/. This last item is critical to making a rent to own a success.

With all the problems with exotic mortgages such as adjustable rate mortgages (ARMS) we might possibly see lenders in the future relax the 18-24 month time frame a little but it will still come down to your income and credit behaviour since the foreclosure.

In closing, finding a home on rent to own is one of the best first steps to getting back on track with home ownership after a foreclosure.

Great Resources for Home Ownership in Minnesota

There was a great article written at the Star Tribune about Leticia Brown's journey towards home ownership:

After being a renter for eight years, Brown was determined to fulfill an ambitious goal for 2007 -- to own her own home. "I wanted to do it for my children," she said.

In the article it mentioned a few programs that are great first steps for anybody looking for home ownership.

...nonprofit City of Lakes Community Land Trust (CLCLT) Home Buyer Initiated (HIP) program, which gives grants to qualifying low- to moderate-income families, and a deferred loan from the Home Ownership Made Easy (HOME) program, which helps Minneapolis, St. Paul and Metropolitan Council Public Housing and Section 8 families become homeowners.

Here are the links to the resources and programs mentioned in the article:

• CLCLT


• HOME Program
  
  view the article here

Step 1 - Road to Home Ownership

Step 1: Enter the Road - Evaluate Your Current Situation
We want you to know that home ownership is possible through MN Rent to Own. Before you begin your search for the perfect home you'll want to take a close look at your finances. This will help you determine what you can afford. By examining your income and monthly expenses you will get a better idea of what is realistic for you and your household.
When you qualify for a Rent to Own you are not qualifying with a bank, though eventually you will have to get approved for financing. This is why step 1 is important for you to understand and complete.

There are three primary things that are important on the Road to Home Ownership program. First is the amount of down payment you have to work with. This should typically be 2-3% of the purchase price of the property. Second, as a general rule of thumb, your household's monthly income should be 2.5 - 3 times the monthly rent. Third is your current credit situation, do you have to establish credit, maintain credit or vastly improve your credit?


to learn more about the Road to Home Ownership Program visit MN Rent to Own