Need Some Advice Please
Im 22 years old and I am currently renting my residence. I have already lived here for a year and have just renewed my lease for another six months. My problem is that I dont want to pay the mortgage on my landlords house, I want to pay the mortgage on my own home. My fiance' owns his own industrial maintenance company and it has been operational for four months. His average monthly income is about 2000 a month. I make an additional $1000 per month. By the time our lease is up, we will have more than enough money for a down payment on a lease option because of a large money job that we will not receive payment for until April. We should have about $9,000 left over after other expenses. My question is this: his credit score is just under 600 and mine is low (not sure of the exact score) because of hospital bills and two collections. Do you think that a lease option is the best choice for us, or should we try to pursue traditional financing? Will we have trouble because we arent married, or should my fiance' apply individually? Do you think that it would be possible for us to get owner financing? My long term goal is to invest in real estate, but we have to start with our own home first dont we? I feel lost here and I dont want to rent forever. I just want to be on the road to having my own home to raise a family in and some extra money in my pocket. If we lease optioned a home, should we still include the right to sublet, and would we be able to acquire a second lease option while still paying on the first? Any advice would be GREATLY appreciated!
You might try talking to loan brokers to see what you might qualify for. There are programs for first time buyers even with not so good credit. You indicated that you would be able to save enough money for a "down payment" on a lease option. If you mean option consideration, this can be negotiated anyway the parties agree. The question is when would you have enough money for a down payment to buy the house. This is where I think the loan broker can help give you information since there are so many loan programs out there. The key is to have the length of the option be long enough so you can come up with a down payment (or loan qualification) on the house. More than half of the lease options are not exercised for lack of down payment or loan qualification. It may be a bit easier if the seller can help with the financing. What you might also do is to have a clause in the lease option that allows extension of the option period for additional option consideration, should you need the extra time.
I am not sure of the context of your question about a second lease option. Are you talking about a second LO on a different house. Please explain what you are looking to do.
Well it is good to see that you are thinking about this so far in advance. The VERY best 1st step you should take is to get a hold of both of your credit reports from all three CRA's and start working on correcting errors and improving that score!! It will only help you chances. Do some research on the Credit forum here or do a Google search and you will come up with LOTS of info on how to help.
You should always try to sign a Lease/Option with your name or Assigns so that if plans change you can sell or assign your lease and rights. You will definately be able to do more than one lease as they aren't recorded in on a credit report or anything like that. So they usually aren't know to other partied unless you make them aware.
Married people do not necessarily make a difference on a mortgage as long as both people are on the loan. Some brokers may play that as a factor, but if they do, find a new loan broker.
Good luck and keep posting questions that may come up along the way.
Thanks for the advice! In regards to the second lease option question, here is the scenario I was considering: Say we lease optioned a house, after a certain period of time would it possible for us to move into a second lease option and rent out the first? Or get financing on a second house and rent out the first? I am trying to find a creative way to make money on real estate without having to wait until we own our own home. I think that it will take too long for us to become homeowners before we start investing. Thanks again!
You don't need to be a home owner to begin investing. One very well known real estate investor/guru never owned his own house. He always rented.
Well of course you can L/O a home and then move to another and L/O that one, while L/O the first to someone else. Just make sure your L/O contracts allow you to do that.
BUT, that seems like a LOT of moving and a possible building of a house of cards. Why don't you just find properties to L/O and the find a tenant that will L/O them from you. You can get higher than market rents, plus, cash from the equity when you buy, and you can use that cash to buy your home someday and saving your moving expenses. Instead of packing up and moving every few years use your packing/moving time and money to go find deals.
You can rent for a few years until you have enough deals that you are making some good money, plus you get time to work on your credit.