Strategy For First Time Homebuyers….
In today’s sellers market you are competing with not only other first time homebuyers but more able and ready buyers ready to compete. If you aren’t ready to compete in a bidding war, buying a single family home might be challenging. But that doesn’t mean you have to keep on renting and never build equity.
Many disagree with me but I suggest utilizing a lease-to-own option contract. You can partner up with companies like Home Partners of America or Divvy Homes, have them purchase the property on your behalf, CASH, you pay them rent and have the option to buy the home from them after X amount of time.
The pro to this is all you need is at least a 580 credit score, prove you have a $55,000/year household income and have 2x the rent for the initial deposit. That’s it!
This is good because you’ll have a better shot of getting one foot in the door. It’s less competition because the company will purchase the house cash for you on your behalf. That way you won’t get looked over if you are someone trying to compete with a FHA loan and barely any savings.
The con is your monthly payment you’ll pay to the company will be at least $300 higher than usual. This is to pay for your future downpayment. If usually rent is $2,000 for a 3 bedroom, 2 bathroom home with a lease-to-own program it might be $2,300. Also, another thing to keep in mind is each year you lease with your lease-to-own company the rent goes up at least $100.
But I still like this for first time home buyers who aren’t able to compete as much because the upfront cost is way lower. Plus, if you were originally planning on putting down $20,000 but instead put down $4,000 so what if the rent is higher. To me, why would I dry up my savings just for a downpayment when I can enter the world of homeownership 5xs cheaper?
It’s just my opinion.
Feel free to reach out if you have anymore questions….