Rent to Own VS Buying Your Home- Which Is Right For You?
Understand the differences between rent to own vs buying traditionally before you take the next step. What are the major differences, when do the transactions differ, and why would you want to choose either option?
Traditional vs. Non-traditional
When making a home purchase
traditionally, you make a down payment, finance the cost of the home, put out funds up-front for closing costs, and start paying toward the interest and principal balance right away. With rent to own contracts, you pay option money (generally much less than a down payment), rent the home you plan to purchase in the future, and invest monthly rent credit to ensure that you can purchase the home when you are ready or at the end of the contract.
Downpayment and Financing
In the beginning of the home buying process
, if you can't come up with a down payment, traditional financing is likely not an option. This is why some people choose rent to own contracts instead. Those who have everything they need to get into a classic mortgage
will likely do so, as it is a more concrete option.
Wait For A Good Rate
In summary, in rent to own vs buying, if you feel like you're ready to buy, but you can't quite come up with the full sum for a down payment
, consider renting to own your home. On the contrary, if you have 20% of the purchase price in savings and are certain you can get financed at a good rate, buy the home now.
Are you a traditional or non-traditional type of homebuyer? The preference of course is personal. Compare these differences to determine which one best suits you. You will be ready to embark on your home buying adventure in no time!