With the current economical downturn, we have all seen a huge number of changes in the way certain businesses run.
The sector of real estate is not excluded.
Seeing that it is becoming more difficult for people to apply for mortgages due to a poor credit score, lease options and lease purchases are becoming the new way in which one can acquire a brand new home. However, because these transactions are not well monitored, there are high chances of fraud and scams taking place as well.
You need to be very careful when you lease option or rent to own a home. If you are not careful, the process of renting a home to own it could be a well mastered minded plan to scam you for your money.
In reality, almost every home owner is struggling with mortgage and bill payments. Everyone is interested in ways to cut down on expenses and save money. The theory of desperate times call for desperate measures seems the theme for everyone facing tough times. Many are desperate to keep themselves out of the red financially.
An example to this happened to my parents just a few months ago. They had signed a contract on their dream home and were anxiously awaiting their move in date. A realtor lived in the home and was friends with the owner, who lived out of state.
As the move in date neared, we found out that the home was in foreclosure and that the owner was over $16,000 behind on the mortgage. The owner and realtor had planned on taking their option fee and rent payment and allowing the home to go into foreclosure. They were then going to continue to collect my parents money until the point in time that they realized that they home had been foreclosed on.
When renting a home with the hopes of owning it in the future, be vigilant in ensuring that you are not being conned. Verify that the mortgage is current prior to taking occupancy.
One thing you need to be very careful of is making sure that you are actually working with the property owner, or a company that is working on behalf of the actual property owner.
Recently scams have come to light that have entailed people advertising homes by way of classified ads, signage in the yards or even the most popular scam on Craigslist. These people have no relational ties to the house or legal right.
The craigslist scam is becoming more and more common. What happens here is that someone overseas copies the photograph of a home that is listed on the market. They then advertise the property at an extremely low rate to attract the attention of potential buyers. Usually they will use family and religion to try to build a relationship. They will say things like they are overseas on missionary work and all that they want is for someone to take good care of the home. Then they will ask you to send them money directly, without you ever seeing the inside of the home! If this happens to you, start running!
Renting to Own or Lease Optioning is a great choice when you can not qualify for financing a mortgage outright, just be careful. Great steps to protect yourself from a scam are to ensure that you work directly with the owner or their assigned representative and to verify that the mortgage is current.