If you are currently renting, you need to evaluate why that is. Chances are, it will make more sense for you to buy. Are you renting because of bad credit? No credit? Just moved to the area? Don’t think owing is worth the trouble? Planning on relocating soon?
Although planning on relocating soon is probably a good reason not to pursue ownership in your current area, many other reasons just don’t stand up. If you have bad or no credit, there are options to help you get into that home. Have you heard of owner financing? Lease options? There are many home owners that want to sell their homes and would be willing to be the bank on their property, allowing you to purchase directly from them without qualifying through a bank.
A Lease Option is simply a lease agreement combined with a purchase agreement. You would lease the property for a set amount of time (usually one year), and at the end of that time, you have the option to purchase the property. This gives you time to work with a lender to resolve your credit issues. In the meantime, you are living in your home.
Owner financing involves the owner carrying the loan instead of the bank. You pay the owner monthly payments which include interest. At some point in the future, you may obtain a traditional loan with a lender and buy the property from the owner. This can be determined up front or negotiated later, depending on your and the owners goals.
If you think that owning is not worth the trouble, think again. Let’s say that you are paying $1200 per month to lease a 2 bedroom apartment. That is $14,400 over the course of one year. This money goes to the landlord and you will never see any of it again. Now let’s assume that you find a lease option home and your monthly payment is still $1200. Let’s also assume that when you signed the lease option agreement, you settled on a value of $140,000 for the home.
After one year, you still have paid $14,400 to the owner, but what if the property appreciated? If the property is now worth $150,000, you now have an extra $10,000 in equity, which means you actually only spent $4,400 over the year. If you instead had owner financing, then the $14,400 would have gone towards your mortgage with the owner, and the interest may have been tax deductible!
As you can probably see, buying is much better than renting, and you can buy even if you don’t think you can!
Jamie Mixon
Top Louisiana Real Estate Agent
Keller Williams
The Mixon Team
1522 W. Causeway Approach
Mandeville, LA
Phone: 985-277-1063
Fax: 985-727-7001
