Rent to Own / Owner financing

November 20, 2008

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.

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Local Information for Fort Worth, TX

Latitude: 32.738881 -- Longitude: -97.33379

ZIP Codes for Fort Worth, Texas	76101 76102 76103 76104 76105 76106 76107 76108 76109 76110 76111 76112 76113 76114 76115 76116 76117 76118 76119 76120 76121 76122 76123 76124 76126 76127 76129 76130 76131 76132 76133 76134 76135 76136 76137 76140 76147 76148 76150 76155 76161 76162 76163 76164 76177 76179 76180 76181 76182 76185 76191 76192 76193 76195 76196 76197 76198 76199
Area Code for Fort Worth, Texas	817
Time zone for Fort Worth, Texas	CST

Other Area Cities: Burleson, TX Arlington, TX Keller, TX Fort Worth, TX Bedford, TX Benbrook, TX Colleyville, TX Crowley, TX Haltom City, TX Hurst, TX North Richland Hills, TX Richland Hills, TX River Oaks, TX Watauga, TX Westover Hills, TX Azle, TX Mansfield, TX

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Fort Worth is the fifth-largest city in the state of Texas and the 19th-largest in the United States. The city is also large in geographic area as it covers almost 300 square miles and is the county seat of Tarrant County—the 18th most populous county in the country. As of the 2000 U.S. Census, Fort Worth population was 534,694 (though a 2005 Census estimate placed the population at 624,067). The city is the second-largest cultural and economic center of the Dallas–Fort Worth–Arlington metropolitan area (colloquially referred to as Dallas/Fort Worth Metroplex), which is the largest metropolitan area in Texas as well as the entire South, and the fourth-largest in the United States with a population of 5.7 million in 12 counties. Fort Worth was founded as a military camp in 1849, named after General William Jenkins Worth. Today, the city is portrayed as more old-fashioned and laid-back than its neighbor, Dallas. -- Source: Wikipedia.com

Texas 2000 Census Population Profile Map

	Fort Worth	Texas	United States
Population	534,694	20,851,820	281,421,906
Median age	30.9	32.3	35.3
Median age for Male	30.1	31.3	34
Median age for Female	31.9	33.4	36.5
Households	195,078	7,393,354	105,480,101
Household population	519,940	20,290,711	273,643,273
Average household size	2.67	2.74	2.59
Families	127,530	5,247,794	71,787,347
Average family size	3.33	3.28	3.14
Housing units	211,035	8,157,575	115,904,641
Occupied units	195,078	7,393,354	105,480,101
Vacant units	15,957	764,221	10,424,540

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