An Alternate Path to Home Ownership
If you’re interested in buying a home but don’t have the credit or financial means to do so, you may have heard of rent-to-own agreements. Rent-to-own can be a good option for those who want to own a home but need time to improve their credit or save for a down payment. In this article, we’ll explain what rent-to-own is, how it works, and whether you qualify.
What is Rent-To-Own?
Rent-to-own is an agreement between a tenant and a landlord, where the tenant agrees to rent the property for a specified period of time with the option to purchase the property at the end of the lease term. The rent payments during the lease term are usually higher than the average rent to account for the down payment and future purchase price.
How Does Rent-To-Own Work?
In a rent-to-own agreement, the tenant pays an upfront option fee, which is usually a percentage of the purchase price of the home. This option fee gives the tenant the right to purchase the property at the end of the lease term. The lease term is typically 1-3 years but can be longer or shorter depending on the agreement.
During the lease term, the tenant pays rent to the landlord, which is typically higher than market rent, but part of that rent will go towards the down payment and the purchase price. The tenant and landlord can agree on the purchase price of the home at the beginning of the lease term, or it can be based on the current market value of the home at the end of the lease term.
Once the lease term ends, the tenant can exercise their option to purchase the property by obtaining a mortgage or by paying the remaining balance in cash. If the tenant decides not to purchase the property, the landlord keeps the option fee and the rent credit.
Do I Qualify for Rent-To-Own?
Qualifying for rent-to-own depends on the landlord’s requirements. Typically, landlords look for tenants who have a steady income, a good credit score, and a history of paying their bills on time. Additionally, the tenant should have enough income to pay the monthly rent and save for the down payment.
Rent-to-own agreements are a good option for those who need time to improve their credit or save for a down payment. However, it’s important to carefully review the terms of the agreement and work with a reputable landlord to ensure that you’re making a good financial decision.
Rent-to-own can be a good option for those who want to own a home but need time to improve their credit or save for a down payment. It’s important to understand how rent-to-own works, whether you qualify, and to carefully review the terms of the agreement before signing.
If you’re interested in a taking a 30 minute no obligation questionnaire to see if Rent-To-Own may be a good option for you, visit:
