How A Simple Lease Option or Rent To Own Can Quickly Stop Foreclosure

As we all know there can be huge consequences for someone who undergoes a foreclosure. These consequences include but are not limited to the following:

• Damage to your credit rating for many years;
• Higher credit card interest, higher car loan interest, and even the denial of credit for many years to come;
• A Possible IRS tax lien due to the foreclosed property that the bank had to short sale;
• Deficiency Judgments on the owner filed by the bank to recoup their losses;
• Ongoing mental stress and embarrassment for the owner and his/her family.

In addition, your cost of borrowing becomes much more expensive due to the higher risk created by the lower credit scores. So while foreclosure my seem to be the best solution in these troubled economic times it will create many longer term problems and should be avoided if at all possible!

One helpful solution is using a creative financing strategy which has been around for many years but becomes very popular during troubled economic times. The reason it works so well is that it’s win-win transaction that allows both parties to benefit. This strategy which is called Lease Option or Rent To Own in it simplest form is a standard leasing agreement between a tenant-buyer and a seller. However, the tenant-buyer has an option to purchase the property at a predetermined price within a predetermined time frame which is typically 10-24 months.

The seller is legally required to sell the house should the tenant-buyer execute the option. In exchange for the rights to purchase the tenant buyer must give the seller a deposit sometimes called an "option consideration". This Option Consideration non-refundable is usually 3%, 5%, or in some cases 10% of the purchase price. On a $100,000 home that’s $3,000, $5000, or $10,000. that you will get before your tenant-buyer moves in. There is no magic formula for the percentage set. The seller sets it at what the tenant-buyers can afford as long as it also satisfies what the seller needs to get to satify his needs. Remember its Win-Win. The option consideration does also go toward the purchase price once the tenant-buyer gets their bank financing in 1-24 months to finalize the purchase and pay off the seller. Again… the option consideration belongs to the seller who can use it anyway he or she wants, which includes catching up back mortgage payments to save the home.

Today as a full time investor, I generate the majority of my income from my real estate transactions helping deserving tenant-buyers. With 100’s of successful creative financing transactions that I’ve completed by selling my properties and by helping other homeowners and realtors, I can assure you that the Lease Option&Rent-To-Own format, if done properly, is safe, easy and it works!

So if you’re facing foreclosure there are options if you simply open up your mind, be a little flexible and create a win-win opportunity for a motivated deserving buyer who also will be more than willing to help you.

Be faithful and I pray the Lord blesses you with success in your quest.


Jim G.

www.SafeRentToOwn.com

Ps.If you have any questions or if I can help in any way feel free to post a comment.