Rent to Own / Owner financing

Just recently I talked to a home repairman. He was telling me how he’d worked for a builder for over 10 years and how he had an “agreement” to purchase a home from his boss. They’d agreed on a price ($23,000) and on an amount that would come out of his paycheck every month. But that was it. Nothing in writing, no mention of interest. The home was in bad repair and the employee spent long hours and money renovating the home. The builder refused to do any repairs as he told the employee that as a home “owner”, it was the employee’s responsibility. Fast forward 10 years. The employee had come into some money and wanted to pay off the home and get a deed. He had enough money to pay off the principle and enough left over to pay interest of 8%. The builder refused the payoff, stating that as the home was worth more now, he wanted an additional $20,000 but that if the employee wanted, he could continue paying monthly. Needless to say, that employee is no longer working for the builder and no longer living in the house he’d called home for over 10 years.

Many people with poor credit feel that a “rent to own” option will help them find a home. They think that it is similar to going to some of the “no credit check” rent-to-own furniture stores that are in every town. “I’ll pay $1000 a month and then one day I’ll own the home”. Yes, it is possible to structure a “rent to own” contract, but it is extremely important to lay out all contingencies. How much of the base rent will go towards principle? Who is responsible for repairs? Is there a default clause if the buyer leaves the home before the house is paid off? Will the buyer forfeit the equity or will he get some of it back? In the case of delinquent rent, will the equity be applied to delinquent rent and the purchase/rent to own contract be voided? Remember, in a rent to own situation, the tenant/purchaser does not have title to the property.

Owner financing is different. In this case, deed is passed to the buyer at closing and a mortgage is held by the seller. The buyer will sign a mortgage note and mortgage the home. The terms of the note will have been negotiated before closing. In this case, the seller is not responsible for any repairs to the home and must proceed through legal channels to foreclose on the property should the buyer default on the mortgage note. Most sellers are reluctant to owner finance to someone with poor credit, but if there extenuating circumstances, this might be an option for those buyers who are not eligible for traditional financing.

Posted by Rickey Williams on November 13, 2009 at 07:16 PM

About Rickey Williams
Rickey Williams is affliated with RE/MAX Ideal Brokers, which is located in Medford, OR. For further assistance please use the contact information located on the right.

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Local Information for Medford, OR

Latitude: 42.331998 -- Longitude: -122.861874

ZIP Codes for Medford, Oregon	97501 97502 97503 97504
Area Code for Medford, Oregon	541
Time zone for Medford, Oregon	PST

Other Area Cities: Grants Pass, OR Medford, OR Ashland, OR Central Point, OR

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Medford is a city in Jackson County, Oregon, United States. It was named in the 1880s by David Loring, a civil engineer working for the Oregon and California Railroad for his home town of Medford, Massachusetts. As of 2005, the city had a total population of 70,860. It is the county seat of Jackson CountyGR6. It is also believed that Medford was named for the intersection of the railroads, running north to south, and Main Street, running east to west. The original name being Middleford, it was shortened to Medford shortly after its founding.[citation needed] -- Source: Wikipedia.com

Oregon 2000 Census Population Profile Map

	Medford	Oregon	United States
Population	63,154	3,421,399	281,421,906
Median age	37	36.3	35.3
Median age for Male	35.3	35.1	34
Median age for Female	38.5	37.5	36.5
Households	25,093	1,333,723	105,480,101
Household population	61,869	3,343,908	273,643,273
Average household size	2.47	2.51	2.59
Families	16,518	877,671	71,787,347
Average family size	2.99	3.02	3.14
Housing units	26,297	1,452,709	115,904,641
Occupied units	25,093	1,333,723	105,480,101
Vacant units	1,204	118,986	10,424,540

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Rent to Own / Owner financing

Local Information for Medford, OR

Latitude: 42.331998 -- Longitude: -122.861874

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