Yesterday, I was talking with a Louisville insurance agent about their business. They mentioned how slow it is to close a new homeowners policy these days. Confused, I asked more questions.
The agent said it all had to do with lending. It is making the closing process more drawn out, and the dates can change multiple times through the process. A lender had told them that since the mortgage crisis the banks are much tighter with their money and requiring significantly more data from customers.
Here’s what could happen. A person could be pre-approved but during the process of locking in things could get rejected or rates and terms could become less favorable.
If there is little credit, medical debt, employment gaps, or past bankruptcies, then everything can come to a halt.
If you are in this situation, does this mean buying a home could be out of the cards for you?
You can escape the rental cycle by doing a lease option or what is commonly known as Rent-To-Own.
This bypasses the banks.
Here how it works.
Someone will sell you an option to buy a home in the future at an agreed price. Usually, this is setup on a 1 or 2-year12 term.
You pay them an option fee to secure the contract.
You move into the home that you will own in the future, and begin paying the owner the payments instead of the mortgage company.
A portion of those payments can go to the principal of the home.
Over the next 1 to 2 years, you have time to repair your credit and begin sourcing a mortgage to fully own the home.
Perhaps at the end of the term, you decide that you don’t like the home or you need to move. You don’t exercise your option to buy and move on. On the other hand, you want to stay. The home has become yours and you are invested in it. At that point, you can exercise the option and purchase with traditional financing.
For more info about the Rent To Own process, click here: Louisville KY Rent to Own
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