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Financial challenges pushing some toward unconventional homebuying

December 8, 2010 - Today's tight credit climate and tough mortgage restrictions have helped to cut down on lender loss, but they have also made it difficult for some consumers to consider moving into new homes.

At the same time, some buyers are finding unique ways to get the home of their dreams even if they don't qualify for a mortgage. A handful of real estate agents from around the country told the Wall Street Journal that they're seeing a rise in consumers who are willing to wait out their home purchase in a rent-to-own home. The unconventional agreements allow buyers to rent a home while putting a portion of their monthly rent toward an eventual down payment on the home.

"We're seeing more requests for them here, and I don't have any doubt there are parts of the country where they're happening more," Fritzi Barbour, a South Carolina broker, told the paper.

When done correctly, the deals can provide valuable time for buyers who don't want to give up their home of choice but also don't yet have the firm financial footing needed to qualify for a mortgage.

Real estate experts say tight credit standards have held back the housing market in some places. The National Association of Realtors' Lawrence Yun has called for more "normal underwriting standards," which he says would energize relocation activity.
 

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