As you consider purchasing a home for yourself and your family, there are many things for you to consider. You will need to decide if you want to purchase a house, a condo, or some other dwelling. The size of the home, the location, the price, and so many other factors come into play when you are thinking about making one of the biggest purchases of your life.
While most people are used to the more traditional process of actually purchasing the house, there is another option that some seem to forget. The option of renting to own a home can make being a homeowner much easier for those who are looking for alternate routes. Read on for some rent to own facts that can help you as you consider purchasing a home.
1. The rent to own transaction is an alternative approach to home ownership. Not everyone who wishes to own a home is able to commit to the traditional sales transaction. In a rent to own agreement, the seller of the property and the potential buyer agree to terms stating the length of the rental. Once the rental time is over, a final sales contract is created. Typically, this type of arrangement has a rent time of two to five years.
Another type of rent to own agreement works similar to a lease. In this type of arrangement, the potential buyer has the option to work towards owning the home if they so desire. An agreement would be created where a timeline is given for the renter to decide if home ownership is the route they want to take. In this arrangement, part of the rent paid will go towards the selling price of the home. This is a great way for renters to try out a home and see if that is the option they would like to pursue.
2. Down payments are different in this type of transaction. In the traditional real estate loan, the buyers are required to make a large down payment to purchase the home. In a rent to own transaction, the down payment is typically much smaller.
3. Credit is not a deciding factor. While some renters like to look at a potential buyer’s credit history, this is not always the case. Many times a renter or potential buyer will have poor credit, but can improve it while living in their rent to own home. With the improved credit, the buyer can then secure the home loan to become homeowners.
4. There is no standard rent to own agreement process. The nice thing about this process is the seller and the buyer can create terms that work best for both of them. They can set their own price, the timeline, and the other factors involved in this type of transaction. It is best to consult with an attorney, though, to assure that the contract is legal binding and no one finds themselves on the raw end of the deal.
5. Along with the rent to own facts for potential buyers, this option is great for sellers, too. In a depressed market, it can be difficult to sell a property. By offering a rent to own option, a new audience is attracted and the home can “sell” much quicker. Not only that but typically, this type of transaction can bring in quite a bit more money over time than a direct sale.
In conclusion, these are just a few of the most important rent to own facts that can help you learn more about the process. Use the information that you learned here to help you determine if this type of transaction is the right one for you.