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Does Rent To Own Make Sense For You?
The real estate market has not been in such dire straits since The Great Depression. Years of easy money and over aggressive lending policies, coupled with a false belief that real estate values will always go up, caused a housing bubble. Millions of people leveraged their homes by refinancing to the maximum amount allowed and/or by taking out (and spending) home equity lines of credit (HELOC) loans. As the economy weakened and we entered into a recession, many people lost their jobs and were unable to make their monthly house payments. The recession cyclone started:
As the crisis grew, banks had to change their lending policies. They could no longer afford to offer easy money and over-aggressive mortgage terms. Then a typical knee-jerk reaction occurred. They stopped lending! But the banks continued to put more cheap homes into the housing market as their foreclosure rate increased. As the supply of homes increased and the number of people able to buy homes decreased, the overall value of homes decreased. Suddenly, those who leveraged their homes to the maximum discovered they owe more than what their home is now worth. Furthermore, banks cut off HELOCs, people continued to lose their jobs, and the cyclone worsened. Today, it appears we are slowly recovering. People with cash or with high credit ratings are able to buy in today's environment. Banks are lending, but policies and terms are tighter. However, the average value of almost all homes has greatly decreased. Millions of people want to sell their homes, but they can't get a fair price. Millions of people want to buy a home, but they can't get a mortgage loan. The one factor that will probably do the most to resolve this crisis is time. It took a long time to get into this mess, and it will take time to crawl out of it. But, what if you don't have the time to wait? Whether you are a buyer or seller, you should consider the rent to own approach because it will give you time. Most rent to own deals use a time period of one year, however that is negotiable. If you are a buyer unable to get a loan today, negotiate for a longer time period, say, three years. If you are a seller unable to get a fair price for your home, you may want to lock in a fair price for a future date, say three years. B. Pappas is an associate of JSC Rent To Own Homes, the free and open website for real estate. (Note, for an explanation of the rent to own approach, see Rent To own Homes Explained.) Article Source:
http://EzineArticles.com/?expert=Bob_Pappas |
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