A new program through Home Partners of America allows future buyers to lease a home with the option to buy later at a predetermined price.
This is great news for future buyers that need to fix a couple of things before getting qualify for a mortgage, or need some extra time to save up for a downpayment. It takes out the added pressure of competing with renters and buyers in a red-hot real estate market.
Another great advantage that users of the program offered by Home Partners of America will benefit from is that it removes the process of moving and having to find a new home.
Many home buyers that were hit hard by the housing bust aren't taking advantage of the current economy low interest rates and real estate market because they can't qualify for a mortgage. With some exceptions, Fannie Mae and Freddie Mac, the government agencies that back more than half of all home loans, require a borrower who completed a short sale to wait four years for another federally insured mortgage. A foreclosure requires a seven-year wait.
By 2022, more than 300,000 South Floridians who lost their homes during the bust will have cleared up their financial issues and become eligible to buy again, show reports from RealtyTrac Inc. These buyers should be able to own again, as long as they've rebuilt their finances and secured steady jobs.
To reach those potential owners, Home Partners launched its lease-to-own program in 2012 and moved into South Florida last summer, so far investing $18 million in purchasing 58 homes. Residents can qualify for the program by proving they have sufficient income and no excessive debts.
Next, the new potential owners will choose real estate agent of their choice to help them find their new home. Home Partners negotiates with the seller, paying cash in hopes of securing the deal.
Once the sale has been completed, Home Partners may even repaint or make other minor cosmetic changes to the property. The tenant moves in and rents the home but is under no obligation to renew the lease or to buy the property.
So what if the prospective owner wishes to buy the home? The new resident can buy the home at any time by paying 5% above Home Partners' total acquisition costs, including renovations. Home Partners is not a lender so the buyer will have to obtain their own financing in order the purchase the property.
If the new resident just wishes to rent the own until they are ready to buy years down the road, the rent will increase annually at 3.75%
This program provides rent and purchase price security that is added piece of mind on this market.