Businesses have changed the way they function in several ways with the current struggling economy.
The real estate business is no exception.
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.
Caution is important when you lease option or rent to own a home. If not cautious, the whole process could be a scam in order to take your money.
The truth is that nearly every home owner is finding it very difficult to keep up with mortgage and bill payments. Nearly everyone is now looking at possible ways to cut down on their expenses and save where ever they can. Seeing that we are faced with very tough times many have adopted the theory of desperate times call for desperate measures in the sense that they will and can do anything to keep them afloat.
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 date of move in approached, we discovered that the house was in foreclosure and the mortgage was behind over $16,000. The owner and realtor were in cahoots and planned to take their option fee, rent payments and still allow the home to foreclose. They were going to allow my parents to continue paying up until the foreclosure occurred.
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.
The most important thing is to ensure that you are dealing the property owner or with a company that is working on behalf of this person.
There has been a increase in people advertising homes that when in fact they have no relation or legal right over the property. This can happen locally, through small classified ads or a sign in the yard. Most common, however, is the craigslist scam.
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!
Although Renting to Own or Lease Optioning a home is a great solution if you can not qualify for a mortgage, you need to be careful! Making sure you are working with the owner or their representative and that the mortgage is current are great steps to protect yourself!