Anonymous
Anonymous asked in Business & FinanceRenting & Real Estate · 4 weeks ago

do you need credit for a rent to own house? what are the risks?

11 Answers

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  • 4 weeks ago

    There are no risks other than the usual - if you trash the place, then of course you will have to pay for the damages.  You are not obligated to use the rent to own "option".  We rented a brand new-rent to-own house years ago and we had no intention of buying it.

    Source(s): Certified Paralegal, with 25+ years' experience & with Real Estate law experience.
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  • Bort
    Lv 6
    4 weeks ago

    Whether credit is needed or not depends on whether the owner that's renting it requires credit or not. Some do require credit, some don't check credit.

    The risks of renting to own a home is primarily liability for damages and repairs. The person renting the property is usually responsible for repairs in a rent-to-own contract. Usually, not always. It depends on what the contract says. If something breaks or stops working the renter has to fix it at their own expense.

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  • Anonymous
    4 weeks ago

    I've known 2 people who did rent to own and with one of them, it was all about bad credit.  Both situations worked quite well.  However, before signing the contract, it's mandatory you run it by an atty.  This shouldn't be super expensive or anything, but with no legal agent representing you, you want to be sure you're protected from anything you haven't thought about.  Just as one simple example, if the stove or washer craps out, who is responsible for buying a new one?  etc etc.

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  • 4 weeks ago

    The risks are in the contract.  What if you pay 50% of the contract and then miss a few payments?  Do they keep all of that equity?  

    Seller financed rent to own homes...just a bad idea.  

    • Nuff Sed
      Lv 7
      4 weeks agoReport

      Highly regulated, if not illegal, in many states for these reasons.

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  • 4 weeks ago

    You don't necessarily need credit to sign the rent to own agreement, because the landlord/seller can accept anyone they want. Buy you'll need credit when the lease period ends and its time to execute your purchase option because you'll need to go get a mortgage - unless the seller is going to offer pre-approved seller financing for you.

    The risks? Well, there's always the risk that you'll be part of the roughly 95% of rent-to-own deals that end up being scams that screw the renter/buyer out of thousands of dollars without them ever becoming the owner of the house.

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  • 4 weeks ago

    The risk is that if you miss a payment, you may forfeit the entire property purchase.

    • Nuff Sed
      Lv 7
      4 weeks agoReport

      That would probably be illegal in any state that even allows "rent to own" agreements.

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  • Anonymous
    4 weeks ago

    If you are dealing with an individual, you probably won't need a credit score.  With a company, you will.

    The biggest risk in this (and has happened to several people I know), is that the seller/individual may not keep up with the real estate taxes and the county will take the house later leaving you with no equity.  Same with a Land contract.

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  • Anonymous
    4 weeks ago

    99% of the time yes. Only if the owner is an idiot would you not.

    Most want your prior rental history with a positive payment history at the very least. One that is not faked. It cant be your deadbeat friend pretending to rent to you.

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  • 4 weeks ago

    Technically no, if the property deal is done directly with the owner, but the owner most probably would want to know your ability to pay. If you fail to pay (or choose not to buy) then all of your payments go to rent. You get nothing back.

    • Nuff Sed
      Lv 7
      4 weeks agoReport

      "you get nothing back"?  Who would agree to that, even if it were somehow legal in that state?

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  • Rick B
    Lv 7
    4 weeks ago

    Of course you need credit to rent or own a home. The risk to the lender or landlord is that you will fail to pay the rent or mortgage.

    • Nuff Sed
      Lv 7
      4 weeks agoReport

      The "lender" in "Rent-to-own" is the current owner. You're financing the contract with "rental" payments rather than loan payments, which can be tricky if not properly documented and agreed.

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