What do you think about rent-to-own housing? I’m not sure we’re financially ready to buy yet, but we don’t like giving money to landlords. Is rent-to-own a wise compromise?
I wouldn’t recommend getting mixed up in a rent-to-own situation. I don’t think it’s a wise compromise, and it’s also the kind of deal that works out well for the landlord, not the buyer.
If you’re not financially ready to purchase a house, then you need to get your life in order before you take on a major commitment like becoming a homeowner. Get your debts paid off, get an emergency fund of three to six months of expenses in place, and save up for a down payment of 20 percent. I know it’ll take some time and it might be difficult, but that’s what I’d recommend.
Buying a home when you’re broke, or trying to trick the system with a rent-to-own deal, usually doesn’t work. I spent a lot of time in the real estate business, and I still own several properties. I don’t do these deals because statistically the majority of people who rent to own never end up owning the property.
Take my advice and go slow, Mike. When you buy a home, you want it to be a blessing, not a burden!
* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.