Renter Worries!!!

[csrhjr31]

My husband and I will be surrending our home this coming week, and moving into our rental home. I like to refer to it as a "projected purchase" home.

We are doing a two year lease/purchase agreement, hoping that we can get a loan in two years.

My worry is that the family we are renting from relocated to Washington. We feel bad, because they just told us that they will be renting in Wa, because all of their equity is in the home they are renting to us. They said the sooner we can get a loan the better. My husband stressed that we would LOVE to get a loan sooner, but chances are it will not be until 2 years. (is it possible to get a loan sooner than 2 years?)

The owners were also telling my husband that the house prices are outrageous in WA and that the home they are renting to us (275, 000) would go for 750,000 in Wa. The wife even said in an email that she hopes we enjoy the house, because she misses it.

Can they break the lease agreement anytime they want, if they would want to move back to Illinois to this house? My worry is that we are hoping to purchase this home in 2 years, but the owners are going to decide to not sell it, is that common?

[gymbo]

I can't answer any of your specific questions but I just want to say - it seems like you feel bad for the owners of your rental home and that is certainly understandable, but they entered into the agreement with you, most likely because the home would not sell in this dismal housing market.

If they could have walked away with the equity, they would have. I am guessing you are paying a fair amount for the rent so even if it takes 2 years, they are still gaining more equity during that time. You were open and honest, and they should honor the agreement they have with you. From what I have read, it takes at least 2 years post BK to get a mortgage, and I hope you don't spend every day feeling bad for them. By renting from them, you are helping them out. If you weren't, they would not have rented the home to you. Live there and be happy until the day you own it

[JustMeJaneD]

Maybe you could do a recorded land contract with them. Its a rent to own that records your interest in the property, among other things

Another benefit is that if you make all the payments on-time when its time to "buy" the house it BECOMES A REFINANCE....which is much easier to qualify for with less than perfect credit. You also can acrue equity while you are renting if you determine the sales price now...That way if the house goes up in value over the next two years you still get it for the amount in your land contract. Always pay with checks if you do any type of rent to own and save your cancelled checks...yes all of them...so much easier then digging them up later) If you do this thought, look into it pretty carefully and have someone professionally draw it up andf review it. There is more to it but it wouldn't hurt to check it out. -Jane

[berrymom31]

We are in the same situation. We are owner financing a house from a very nice couple who are sympathetic to our situation. We went to a real estate atty who drew up an amortization schedule and everything...and in the contract they would like it to be paid off in 5 years, which means we need to get a loan in five years to pay for it. But in that time our credit should improve after the BK7 we will be filing in 6 months, and we can do a refinance since we have all the paperwork to show we were entered into a owner financing contract. It was simple and the real estate attorney only charged 263 for the process and to record it with the city.....this way you can claim the interest on your taxes as well. Now, our situation may be different since they hold no mortgage on the home....but I'm not sure. Good luck!

Oh, and FYI I've done some extensive research about loans after BK and they all require the BK be 2 years out....but that does not mean there are no options besides that.

[FreshLikeADaisy]

Csrhjr31, regardless of the owner's possible change of heart, you are still a tenant of that property and thus have the same legal right to notice and appeal that any other renter does.

However, if you're really uncomfortable with the thought that they might want the house back sooner than agreed upon, then at some point when you can better afford it, contact a real estate atty to review the lease agreement (or rent to own, or whatever it was) and tell you what provisions for breaking the lease are included in it, not only for them but for you. If no provisions are written into the agreement between you, then it will be the bare minimum your local landlord/tenant law provides for, at least a proper notification of eviction.

But you never know. It may be that in two years, it's in their best interest to keep renting to you even if you can't get a loan the day the two years is up. Look at it this way: two years ago, I'm betting you had no idea you'd be in bk today. Who knows what two years can bring?

Good luck, and many blessings in the next two years to you and yours.