Wow.....lots of questions...
>Can you sign a year-lease and move out just like a rental?
It depends on the contract. Most rent to owns are very specific in terms of what the owner wants, hence, almost every deal is different. Normally YES you can move out, but none of the monies being set aside via rent payments would be refundable.
>Are there more strict credit requirements than with rentals?
Maybe, Maybe not. It depends on if you will ultimately finance the property through the seller or through a morgage co. Sometimes a seller doing his own financing will be more leniant than a mortgage company and sometimes they will be more strict. There is really no typical scenario for these deals.
>Who owns the home while you're paying it off?
The owner.
I'm guessing at why you ask and if you are curious if you will have any ownership in the property the basic answer is no. No tax or interest writeoffs until you close.
>Do you lose your investment if you move out before it's paid off?
Most likely, YES. Typically the payment is the same as it would be if you were renting. The rent to own agreement might say something like......if tenant closes on this property before xx/xx/xxxx, $$$ out of every rent payment tenant has made will be credited to his down payment....or something similar. If you don't close, the money typically is not refunded unless you are paying an amount higher than what is typical of what the property would rent for. Then, only the money above and beyond typical rent is refunded.
>Do they require down payments?
Typically, thats the real purpose of rent to own. Coming up with a down payment. It gives the potential buyer an opportunity to "save" some money towards a down payment by having a portion of each payment apply if they completed the purchase.
>Bad idea/good idea?
Well....In my experience....Once a person moves into a home they don't own yet...and find out all of it's little quirks and faults...they tend to move on to that hallowed grass on the other side of the fence. It's a lot easier to pick up and move when you have no real financial ties to the property.
On the Good idea side.....if you find any serious issues with the house, you can walk away......you accumualte a little piece of the downpayment with each rent payment.
My advice based on what I know of your situation....which amounts to nothing
.....have someone who knows contracts very well...a good realtor or an attorney....look over the deal.
Have you checked into 100% financing options? They exist. We live in different times now. In the old days, lenders looked for a reason not to give you a loan. Now, lenders are itching to do whatever it takes to get you the loan. I would talk to a good LOCAL loan officer before I looked into anything. You might be suprised what they can do.
Good luck!
Kerry
