Do You Recognize the Warning Signs of a Lease Option Scam?

Published: 27th August 2009
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With the current economical downturn, we have all seen a huge number of changes in the way certain businesses run.



The real estate business is no exception.



Seeing that it is becoming more difficult for people to apply for mortgages due to a poor credit score, lease options and lease purchases are becoming the new way in which one can acquire a brand new home. However, because these transactions are not well monitored, there are high chances of fraud and scams taking place as well.



Caution is important when you lease option or rent to own a home. If not cautious, the whole process could be a scam in order to take your money.



Millions of home owners are discovering it almost impossible to make their mortgage and bill payments. Everyone is interested in cutting corners and saving on their expenses. These economic times, have prompted many to do just about anything to keep their finances afloat.



My parents were almost the victims of this recently. They found their dream home and signed a contract with the realtor who was currently living in the home. The owners of this home were his friends and lived out of state.



Before the move in date, we requested verification that the mortgage was current as required by the contract. At this time, we discovered that the mortgage was behind almost $16,000 and that the home was in foreclosure. It was eye opening to discover that the owner and realtor were cohorts to attempt to take my parents money. They were planning to collect my parents money, the option fee and rent payments yet still allow the house to foreclose.



To put it bluntly, if you are in a rent to own scenario with the intent of owning in the future, be cautious as you could be being scammed. Always make sure that the mortgage is current before you move in!



One thing you need to be very careful of is making sure that you are actually working with the property owner, or a company that is working on behalf of the actual property owner.



There has been a increase in people advertising homes that when in fact they have no relation or legal right over the property. This can happen locally, through small classified ads or a sign in the yard. Most common, however, is the craigslist scam.



This type or craigslist scam is becoming more and more frequent. Often someone who lives overseas will post a photograph of a house currently for sale. They will state they want someone simply to care for their home, while away with family or on mission work. They will then request you to send money directly to them without you ever seeing inside the home. Should this happen to you, LOOK OUT!!!



There are several steps to protect you from being scammed in a rent to own or lease option purchase. Ensure that you are working with the owner or his agent directly and that the mortgage is current. These few simple steps will ensure that even if you do not qualify for financing outright of a mortgage, you can still own your dream home!



Wendy Polisi is the Vice President of Finance the Dream which offers Lease Purchase and Rent to Own Homes through out America. Their program is designed to help people with less than perfect credit achieve the goal of home ownership. To learn more about improving credit please visit her at liferebooted.org, the blog that tells you everything you need to know about bouncing back after financial setback.

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