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.

Like many others, you may be considering a lease option or rent to own homes as an alternative to buying 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.

It is important to begin working to improve your credit score as soon as you decide to Lease Purchase a home. The first step is to pay off any current collections and pay down your credit cards.

Part of your credit score is derived from the percentage of revolving credit that you are using. For this reason, you want to have multiple credit cards, all with low or no balance. Your score will be much higher if you owe $2,000 and have $40,000 available than if you only have $4,000 available.

If you have existing loans with a finance company, they should be paid off quickly. Unlike bank loans paid on time, finance company loans lower your credit score. This is because they are considered a sign that you are strapped for cash and as such had to seek out a high interest loan.

You will need to do more than just repair your credit because there are other factors which will impact your ability to qualify for a loan.

Income and job stability are key factors. You want to try to have a minimum of two years with the same employer. The exception to this is if you have changed jobs due to career advancement. This can be viewed as a positive.

If you are self-employed, qualifying for a mortgage is especially difficult due to changes in loan programs. Most people that are self-employed are taking full advantage of the tax code, and as such, do not show much income.

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!

by Vincent Polisi
About the Author:
Vincent Polisi is Owner of financethedream.com. financethedream.com is the nations top Rent to Own and Lease Option program, offering homes throughout America. financethedream.com prides itself on offering a complete home ownership program for its clients, including credit reporting and credit repair.

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