Your guide to understanding rent to own agreements via @homebidz

Your Guide to Understanding Rent to Own Agreements

First Time Home Buyers Click Here

Having a rent-to-own house, the client pays an up-front option payment and makes routine lease payments with "lease credit" repayments built in. These somewhat higher payments in rent to own agreements accomplish two tasks:
  1. They let the customer to gradually build up a deposit, should they opt to buy the house at the conclusion of the deal.

  2. They "acquire" the right to possess that said choice.

This, like every other property purchase arrangement, is a lawful contract, providing the customer precedence over another involved party. Moreover, as the cost is normally determined in the time the buying agreement is signed, the purchaser is bound to the cost agreed up on, even though another purchaser approaches the vendor with a higher bid.

Why Choose a Rent to Own Option?

When long term renting doesn't make sense anymore, and a substantial deposit is unavailable, lease-options (rent to own agreements) can solve the problem. The up-front option payment is normally significantly less than what downpayment would be. This is what makes them so appealing.

Who Benefits From Lease Options?

Both buyer and seller can really benefit from these types of contracts, since buyers will have little upfront payments, and sellers have a chance to earn some extra income while they lease their property. In the meantime, the equity on the said home or piece of real estate might increase, creating an opportunity for a higher price later -- this is not necessarily a good thing for the buyer, but fortunately these contracts generally provide an option to buy, not a commitment. This quote found on Trulia's website will give you an idea how it can work:
"I am about to close on my Virginia home and I feel it's been a great solution for both sides. My house had been on the market 2 years because of a new development down the street that had newer, bigger homes all in foreclosure that were a better deal. The buyer had a foreclosure on his record, and was in the mortgage time-out chair for another year. We agreed on a decent price for that time with a solid, non-refundable downpayment to ensure his performance. He paid my mortgage and handled all repairs, which was a welcome relief after two years of trying to sell. Now we're closing at a price that is 87% of current market value, which is a GREAT deal for him (though it doesn't make my old neighbors very happy!). I'm ok with it, because I collected the difference (or most of it) in rent over the last 15 months. Win-win..."
-Jim Olive, Agent, Key West, FL

Final thoughts

Rent to own options are great for people who don't quite have enough money for a down payment, or who need some time to build credit and save on interest later. They end up benefitting both buyers and sellers in the long run. So, if you think you're ready to buy a home, but you don't quite have the cash, start exploring rent to own opportunities today.

First Time Home Buyers Click Here

Latest Posts

Loans, Fees, and the Real Cost of Owning Your Home via @homebidz

Loans, Fees, and the Real Cost of Owning Your Home

Need a Home Loan? We know this may come as a shock, but that home that’s for sale for $350,000 will actually end up costing about $575,000 over time. How? Between the interest rates, insurance, property tax, and...
Rent to Own vs. Traditional Mortgages via @homebidz

Rent to Own vs. Traditional Mortgages

Need an FHA Loan? It’s no secret that most people seek out rent-to-own home options over traditional mortgages because of credit issues: either their credit is fair or poor or simply just unestablished. Depending...
Why Does My Credit Matter? via @homebidz

Why Does My Credit Matter?

Click Here to Look at Bad Credit Home Loans Honestly, if you have less than perfect credit, you can still potentially buy under a rent to own option, but you still have to get financing at some point, so you'll need...
Taking the First Step on Your Rent to Own Journey via @homebidz

Taking the First Step on Your Rent to Own Journey

Looking for Rent to Own? When considering a rent to own journey, there certainly are a couple different choices. Each requires the rental property itself, two authorized documents, and then -- sometimes -- an...
Simple Ways to Save for Your Down Payment via @homebidz

Simple Ways to Save for Your Down Payment

Need Family Support? There are a lot of different ways to purchase a home. You can get creative and try owner-financing, or even buying a home at an auction. For the majority of us though, we’re still using banks and...
Should I Rent to Own or Lease? via @homebidz

Should I Rent to Own or Lease?

Check Out These Listings You've found yourself asking, "Should I rent to own?" or "Should I look into a lease option?" Understanding your options, and determining if a rent-to-own or lease option is the most...

Categories