Thousands of people file for bankruptcy in America every year and an even greater amount lose their homes during the process. After filing for bankruptcy or foreclosure, most people face a gap in their credit rating which is sizable enough that they would not be able to qualify for a bank loan needed to purchase a house through the conventional methods available.
Financial Woes, Housing History, and Moving Forward
One thing we recommend as a first step is to face the music. When was the last time you checked your credit score? Knowing exactly where you are can be the best first step to get where you’re going. Click here to check your credit score now.
Oh, and for those of you who already know that your credit needs a little work– no worries, we’ve got you covered too. Click here to check out our proven credit repair services so you have a head start.
A rent-to-own home is one of many solutions that you can use to fill this void and transition from recent bankruptcy to homeowner again. You will have the opportunity to build your credit back up again as you pay the seller an agreed amount every month. A portion of this rent will be put into an escrow account and go to the total purchase price of the home when it comes to the end of your rent-to-own lease agreement. At the end of this agreement, you have the right to buy the home from the homeowner.
(Note: Something else to consider is that first-time home buyers have some incredible incentives and help available to them. If you’re a first-time home buyer, click here so you don’t miss out on any opportunities.)
The question is what are the steps will you have to take to get into a rent-to-own home contract? Here are four steps you can take to get ready to approach a seller to enter a rent-to-own agreement.
- Map out your budget and financial goals. Write down all of your credits and debits in your current financial situation. Take your monthly expenses and subtract them from your monthly income. This will help you determine what you will be able to afford in rent and what you can save for the future purchase of your home.
- Look at and rebuild your credit. The minimum score needed for a rent-to-own home is 620 or higher. Rent-to-own homeowners will vet your financial and credit history when looking at you as a potential homebuyer. Tell them about your bankruptcy or foreclosure and be honest with them. Meanwhile, consider taking out a low-interest credit card to help build your score back up. Don’t open too many lines at once or it may do more damage. Take care of any collections accounts and dispute errors on your credit report.
- Get ready to pay a deposit. Like any rental, rent-to-own agreements will require you to pay a deposit when you move in. If you have a bigger deposit ready when you are meeting with sellers, it shows that you are moving towards recovering from your financial troubles.
- Start looking for properties. Check local listings, real estate property managers, and websites like Rent to Own Home Finder, Zillow, and Trulia in the area where you would like to live. Contact sellers of the properties that stand out to you and be honest about your financial past. This may immediately put you out of the running, but if you disclose it right away, you may be able to negotiate with the seller.
Regardless of your situation, there are options for you to find a home or property to rent to own. Each option will have its own pros and cons based on your individual situation, but all can help you get the home you need in a way that fits into your budget. There’s no reason you shouldn’t be able to enjoy the benefits that a rent-to-own home has to offer after finding yourself in financial difficulty – so know your options and find the one that will work best for you!