Buying or Selling a Home/Rent-to-own vs buying
Long story short, my dad was an engineer and got laid off about 22 yrs ago and had to file bankruptcy. Ever since then my parents have been renting homes. The townhouse my sister, parents, and I are in currently we have been living in for about 15 yrs. This townhouse is so old and I think by the grace of God has not fell apart. My parents are in their early 60s and do not want to move again unless it's for permanently. They also don't want to move just to rent again or into another townhome. My mom thinks they’re too old for anyone to sell hem a home. I'm willing to find them a home. My mom has good credit, but only works an office job (about $13/hr). My dad is a teacher and has many school loans and bad credit. My sister is a waitress (makes about $35,000 annually) and thinks her credit is between 604-631. She is willing to go in on a house with my mom (she will be a first time buyer). With the money they make and the credit I'm guessing they will only get an approved loan for the low $100K. I fear those homes might need a lot of repair which we do not have money for. There was a rent-to-own company (hbrc-r-t-o.com) that we almost signed papers with a couple years ago, but my mom got laid off right before then, so we couldn’t anymore. Their company totally renovates the house before hand and puts all rent towards the down payment, which makes me feel more comfortable. However, my other sister is now concerned that when it’s time for the leased house to be bought, do the renovations make the value of the house go up which could cause us not to be able to afford the house? So my question is, should my parents try to buy, rent-to-own, or just continue to rent because qall odds are against them?
I can't really answer your question, but these are things that you need to consider.
1) What mortgage/what rate do you qualify for?
There are lots of great mortgage programs. Having a good mortgage officer review everyone's credit and income will provide you with what is possible. Once you know what is possible, you can decide if it is a good idea.
2) Don't get in over your head. Buying a house is a commitment to making repairs at some point. There are no maintenance free houses. Also, buying a house works financially because for most people it's "forced savings" and investing. Most people going from renting to buying have to "tighten the belt", because owning is more expensive than renting- for about 4 years. Then it is cheaper. Bottom line, if you don't have a "cash-cushion" work on that first - and the house second. If you can't save any money, than buying a house is likely to make things worse, not better. I would focus on getting everyone better jobs and improving income. For example, your sister: can she move up to bartending? Most barteners make 20% more than waitstaff, and the hours are better, and the work is less physical (I speak from experience here!). Or perhaps she has eyes on a field that has more upward mobility. Don't get me wrong, there's nothing wrong with being a waitress, but if your family is strapped for cash, it may make sense to look for careers that pay better than unskilled labor.
3) Whether owning or renting, it's a personal decision. There's no right or wrong. However, even with your parents in their early 60's, there's a good bet that at least one of them will still be around at 80 - 20 years from now. I can tell you that a house is very likely to worth more 20 years from now, so it certainly makes sense with that time frame in mind.
4) Rent-to-own is almost always a bad deal for the renter/owner. Those contracts are complex and rarely are a good deal for the purchaser, so be careful. They only sound like a good idea. 99 times out of 100, you can save money faster on your own than you can under those agreements - with a lot less risk.