There are many homeowners out there caught in a proverbial rock and a hard place. Buying a house is simply out of the question for them, but at the same time they can’t afford to keep renting forever.
Luckily, there is a solution: rent to own homes. Here’s how it works.
What Are Rent to Own Homes?
Rent to own homes are, as the name implies, homes that tenants rent and can eventually home. It allows homeowners to live in a house for one to three years, all the while paying a bit at a time, until they can eventually own it.
How Does Rent to Own Work?
Instead of purchasing a house, a potential buyer draws up a contract with the seller that stipulates the monthly rental payments based on the home’s value and on the going rates of property rates. Included in this rent is an extra sum that goes towards a down payment. The seller pockets the rest of the rent. By the time the lease is up, the homeowner will have saved enough for a down payment.
Why Rent to Own?
There are tons of reasons you should rent to own. First of all, it’s a great way for people with bad credit to purchase a home while improving their credit. Secondly, it locks the price of the home in, which means that if the home’s value increases more than the seller anticipated over the year’s, the buyer doesn’t have to pay the extra amount. Third, it gives the buyer the option to back out of the deal if they discover that they don’t actually like the house. If they do decide to turn it down, though, they do not get back the money they put towards a down payment, unfortunately.
Renting to own is an excellent option for anyone in a tough financial position. If you have any questions about rent to own homes, feel free to ask in the comments.
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