Rent-to-own, or lease option as it is also known, is a real estate transaction in which the buyer rents a home and then can purchase that home at some point during the rental period. Renting with an option to buy gives tenant-buyers time to repair their credit and save up for down payments and closing costs. It also allows them to have a "try before you buy" period to find out what it would be like to own that home and not worry about maintenance or upkeep.
This article offers tips to someone who would like to rent-to-own a house. The article explains the pros and cons of this method of buying a home. Advertising agencies have picked up on this popular trend within the past few years to reach more customers through online search engines. Today, you can Google "rent to own homes" and find a list of agencies ready to help you.
Rent-to-own agreements typically require the tenant-buyer to make monthly payments towards eventual property ownership. After a predetermined period, the renter-buyer and owner will execute a purchase and sale agreement and transfer ownership.
The monthly rent payment is often higher than the monthly rental payment on similar homes to compensate for this. There are also costs associated with entering into these arrangements, such as application fees, credit report fees, inspections, and other administrative fees.
The option money is typically non-refundable but may be applied to the down payment on the home if the purchase contract is executed.
Tenants are still responsible for their everyday living expenses while renting under a rent-to-own agreement, including paying utilities and maintaining the property in the same manner as the owner would.
Is it a good idea to buy real estate with no money down? Not usually! This article goes over some reasons why in this informative piece on rent-to-own homes and shares helpful tips such as verifying the down payment amount, getting a written agreement, and understanding your terms with the seller.
Here are some tips on how to get started if you want to rent-to-own your home:
Make sure that the company is reputable. Check online customer reviews about their business; this will give you an idea of whether or not you should work with them.
Verify the down payment amount. Rent-to-own homes usually require less than 25% of the purchase price in downpayment, but still, double-check to make sure that there are no hidden fees or added costs when it comes time to close the deal.
Get a written agreement. Make sure that you understand everything before signing any documents. Ask questions until you are fully aware of your contact details with the seller and the agency involved.
Check on how much they will charge per month for rent and what it will be used for (such as your initial payment, utilities, or any other additional fees that may be charged later on).
Check if they charge any application fee.
Understand the terms of your agreement with the seller so you can avoid any costly mistakes. For instance, is it for one year only? Can you buy the home once you've paid all the rent payments?
Look for options to buy over time. This may require you to pay a higher monthly amount than if you bought it outright, but at least you can come up with your downpayment bit by bit. This will also give you some breathing room if something unexpected comes up and you need more money.
You must meet the agreement terms before turning over your house keys to the seller. If they fail to fulfil their part of the deal, such as not paying rent on time or not fixing problems that need repair within a certain period, then legally, they can keep your home until those issues are settled.
Finally, make sure that you read the agreement before signing anything. Ask your agent or lawyer if there are any parts of the contract that you don't understand. Don't be afraid to ask questions; after all, this is your future on the line.
The advertisement also suggests checking with an agent or lawyer if you don't understand, as this article aims to inform readers of how to properly plan for their future by learning more about rent-to-own homes.
Buying real estate in cash is rare these days. That's because to purchase a home. Most people need a bank loan with a 20% down payment.
