Decide If a Rent-To-Own Home is a Good Idea for You
There are many reasons why a rent-to-own home can be a good idea for you. If you're having trouble qualifying for a loan on a traditional mortgage than you'll want to examine the rent-to-own real estate alternative. You can get into a rent-to-own home for a lower down payment and you'll get to live in the home before you purchase it. Let's examine some of the benefits of rent-to-own real estate.
There are several benefits to a rent-to-own home. To start, you'll be able to move into the home with a lower down payment than that of a traditional mortgage. The down payment on a rent-to-own is called an "option fee" as is typically 5% of the purchase price, whereas a traditional mortgage is 20% as the standard. This option gets applied to your down payment once the lease has ended and you make the purchase.
Once you've settled into your future home you'll have some time during the lease period to save up money and build your credit rating. The lease period is typically 3 years but can be anywhere from 1-5 years depending on the seller. While leasing you'll be paying rent with a rolled-in rent premium. The rent premium gets added to your down payment when it comes time to purchase.
The purchase price of the home gets locked in once you sign the lease. This means the price could be much lower than market value when the time comes to apply for a loan, saving you a lot of money.
In addition to the benefits for the purchaser, there are also many benefits to the seller. For example, rent paid by the tenants can help avoid a foreclosure on a home that the seller may not be able to afford themselves. This is especially true if the seller has already purchased another home and is having trouble selling the first property. Additionally, if the tenant doesn't purchase the property at the end of the lease then the seller keeps the money paid towards the home.
All-in-all a rent-to-own home can be a great idea if you are the right fit for this particular type of real estate investment. If renting-to-own sounds like a good idea to you then check out our rent-to-own home listings to find the right home for you.