Rent-to-own schemes have long exploited the poor, the young inexperienced home buyers as well as people with credit problems. The basic transcation is that a person rents a home and pays for an option to buy it at a later date. However, most rent to own scams involve some type of foreclosure action. The renter normally has to come up with at least 3 times the security deposit and will make payments to a landlord. The landlord will pocket the payments and deliberately not make the mortgage payments. He will then attempt to delay the foreclosure process as long as possible and the tenant is left stuck with a useless rent to own agreement. Don't be a victim to the scams.
1. Seller Demands Application Fee From You to View the Home
If a seller asks you to pay an application fee to view the property, it's probably a scam. Scammers will attempt to post listings for homes they do not own in order to collect money from inexperienced buyers.
2. The Terms Seem Too Good to be True
Rent to own scammers will claim to give you financing with no money down, no credit check, suspiciously low rent and all utilities paid! If it looks too good to be true... well you know. If the terms appear to lean drastically in your favor, its probably a scam.
3. The Seller is Suspicious
Perform a background check of the seller, landlord or company before signing any contracts with them. Many rent to own scam artists list homes online when they donít even own the property. A scammer may also attempt to market a home that is subject to foreclosure.
4. The Contract is Ambiguous
You should always hire a Real Estate Attorney before signing any contract. They can help interpret difficult legal terms and conditions.
5. The Seller wants a Huge Cash Downpayment
These scam artist often want a huge cash downpayment upfront. They take advantage of those who desperately want a house but cannot secure a mortgage. They deliberately seek tenants who they know cannot afford the house. They hope to steal the renters option money and rent credit when the lease expires.
Even legitimate Lease to Own transactions always favor the Landlord Seller and never the rentor. If you are dedicated to the idea of buying a home, work on improving your credit rating and create a savings plan. When you have enough for a down payment you get to decide on the price you're willing to pay for a home based on the current market conditions. Get Go ahead and talk to a local Mortgage Banker to get pre-qualified. You may find you're qualified now for a mortgage loan.