Our closing coordinator, Melissa, recently reached out to all her Facebook followers (and there's a ton of you! 👏) and asked what their hesitation is with BUYING VS RENTING. She got a lot of good feedback and reasonable concerns but we're here to guide you in the right investment.
The top three major concerns with purchasing a home vs just renting a property were:
We thought we'd get you the most reliable information and collaborate with a lender on these answers. There are tons of great lenders out there to work with and find the best loan that suites your needs. If you're in need of a recommendation we work with a select few that we can refer to you that we know get the job done.
Amber Patterson and Ryan Bittinger with The Pattinger Team at Allied Mortgage Group are a great source when it comes to getting your questions answered thoroughly. Let's see what they have to say about your top concerns when it comes to BUYING VS RENTING.
#1. BAD CREDIT
What if a potential buyer has "bad credit"? What is considered "bad credit"? How do they rectify their credit and how quick can they apply for a loan after fixing up their credit?
Answer: Low to poor credit is generally defined as having scores at or below 580. Our first piece of advice is to obtain a free credit report and thoroughly review the reports in their entireties to ensure accuracy. Your name, current address, birthdate and current employer should all be the same across all three bureaus. Generally, all bureaus should have the same information; creditors names, account numbers, current balances, accurate payment information, etc. If you should discover inaccuracies, you should dispute this information by completing either the online dispute process available on each individual credit bureaus website or request dispute forms from us to mail individually to the bureaus. Cleaning up your credit is really contingent upon your particular situation. It can take as little as a few weeks to years. It is very situational.
#2. COMMITMENT ISSUES
Are there any restrictions based on the loan to rent out the property? How long does an owner have to live in the property before renting it out? What is the benefit of renting out a property before selling it?
Answer: Certain programs do have certain restrictions on renting out properties. It depends on factors such as, loan program, property purchase type (primary, secondary or investment) and if any down payment assistance program was utilized in this particular transaction. It is imperative you understand the terms of your particular loan program and any restrictions that may be applied to your situation. Benefits of renting out a property before selling it is VERY situational. It depends on many factors such as the market, if the property is still financed with a monthly mortgage payment, if the borrower intends on obtaining additional financing for a new primary home, etc.
#3. DOWN PAYMENT
What is the minimum percentage a buyer would need for a down payment? Are there any 100% financing programs? How can buyers lower the cost of their out of pocket payment for closing?
Answer: We offer 3% down payment conventional, and 3.5% down FHA loan products. There are also 100% financing programs available including but not limited to VA and USDA. However; there are certain factors such as eligibility, property location, income and household size restrictions, and other factors that must be met to qualify. Buyers may also minimize their out pocket expenses during a purchase transaction by acquiring seller concessions and accepting lender credit.
We appreciate Melissa for starting this conversation with her friends and family and we want to thank The Pattinger Team for touching base on these major concerns. If there are any other questions Amber or Ryan can answer for you, please feel free to reach out to them directly. Or if there are any questions our team can answer for you, we'd love to have the opportunity to chat with you in regards to home-ownership.
If you're interested in entertaining the idea of leasing with option to purchase, check out this program. Or contact us!