How to Win With Lease Options and Secure Your Future!
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In today’s tightening lending environment, you may be like many people who are unable to qualify for a home loan. Still, your family deserves a home they can call their own.
Many people consider a good option to conventional financing to be renting to own or lease purchasing a home.
If you are serious about buying a home, this can be a good option. However, if you don’t start doing what it takes to qualify for a mortgage at the beginning if the term, a Lease Purchase can be a financial disaster.
You probably understand that a good credit score is critical to obtaining a loan approval. Times have changes and a strong income and cash to put down are no longer enough.
You must start repairing your credit right away! Your first step should be paying off any recent collections. You will also want to pay your credit cards down as much as possible.
Because part of your credit score comes from the percentage of revolving credit that is available, you want to have at least four credit cards that are not close to their limit. Your score will be higher if you owe $1,000 and have $20,000 available than if you owe $1,000 with $10,000 in available credit.
If you have finance company loans you will want to get them paid off as soon as possible and have the accounts closed. While bank loans reflect positively on your credit score, finance company loans will actually hurt your score. The reason for this is because most people seek out finance company loans when they are desperate for cash. The credit bureaus see these loans as a sign of financial stress.
Because there are other factors that impact your loan qualification, you will need to do more than just repair your credit.
Other things that are important include job stability and income. Two years with the same employer is ideal. If you have changed jobs, this may be ok, provided the job changes were for career advancement.
Self-employed individuals have special concerns. More and more self-employed individuals are having a difficult time qualifying for a loan in today’s lending environment, regardless of their credit score. The reason for this is that they have difficulty verifying their income through their tax returns.
While stated income loans were once popular among self employed individuals, they are no longer available. If you are considering a lease purchase or lease option, it is important that you begin documenting your income immediately. Lenders will require at least two years of documented income.
Non-citizens should be especially careful when considering a lease purchase or lease option. Significant cash and an established credit file will be critical. Even then, there is no guarantee that a mortgage will be available at the end of your lease term.
By actively working on credit repair and paying attention to other factors that will impact your chances of loan approval, you can quickly be on your way to becoming a Lease Purchase success story!
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