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An increasingly popular option for persons seeking a home in today’s market is to rent-to-own (or lease-to-own) the property. The process basically works like this:

The homeowner agrees to rent his home for a specified period of time, usually from one to three years. At the same time, the tenant receives an option to buy the property at any time during the rental period at an agreed-on price.

A predetermined portion of each monthly rent payment is credited toward the down payment if and when the option is exercised. Also, an initial cash payment is usually required, ranging from 3 to 7 percent of the home’s value. This payment is totally credited to the future down payment and is nonrefundable.

Many of today’s prospective home buyers don’t have the needed cash for a down payment towards purchasing a property, or they can’t qualify for mortgage financing due to the current rigid underwriting standards. By entering into a rent-to-own agreement, they can quickly move into the selected home, knowing they can own the property a bit later when their financial situation improves.

The home cannot be sold to another buyer during the time it is occupied under the rent-to-own agreement.

Offering to rent the home in this way can be a wise option for the homeowner. He may otherwise wait a very long time for a buyer in this sluggish home-selling market. If the owner has already purchased and moved into a new step-up home, he can thus avoid making two mortgage payments each month without any revenue generated from his previous residence.

If the tenant decides not to take the purchase option, the owner has still benefited from the nonrefundable initial cash payment and monthly rent payments that are usually a bit higher than normal rents.

For more information, consult a local real estate agent or attorney who is knowledgeable about local home sales and rentals.

Are title insurance companies making less money during this slow home selling period?

Yes, title insurance companies wrote $2.30 billion in premiums throughout the second quarter of 2011, down from $2.33 billion in the second quarter of 2010, according to the American Land Title Association’s, ALTA, second-quarter market share analysis.

However, premiums increased in 21 states and Washington, D.C., compared with the second quarter of 2010, the report noted. The greatest increases in premiums were seen in Iowa at 70 percent. In Iowa, state law prohibits title insurance offices to operate within its borders. Out-of-state companies must provide the coverage.

Title insurance is one of the most expensive items for closing costs in a home sale transaction. It’s often viewed as much too expensive, considering the availability of computer databases for title searches.

To find out more about Jim Woodard, visit www.creators.com.