Due to the recent recession and other downward spirals of the economy, the price of brand new homes has risen to mind boggling proportions. If you think you could afford a brand new house, think again because the prices have skyrocketed. This is the prime reason why rent to own home has become a great alternative and it has become more and more popular. For someone who is new to this type of deal, there are things that you need to understand first before availing of a rent to own home deal.
People need to crawl before they walk, and float before they swim. If you walk before you learn to crawl, you will stumble and fall. If you swim before you learn to float, you will drown. The same thing goes for these deals. Getting into a rent to own deal without enough knowledge about it may hurt you financially and emotionally. You need to have enough information on rent to own homes before you put pen to paper.
Rent to own is an agreement between a buyer, which is you, and the seller, the landlord. Basically it works like a car lease. An agreement like this will allow you to live in a house provided that you pay a certain amount of rent; this is the rent portion of the deal. You will be allowed to rent the property for a certain period of time; this is usually spans about three to four years. After which, you will be given the option of buying the house altogether. This is rent to own. Usually the amount of rent for these deals are higher than the usual rent, this is because this extra amount goes directly to the down payment of the house. Every time you pay the rent, you are partially paying for the home. In a rent to own home deals, you must pay an upfront fee. If at the end of the contract you buy the house, this fee becomes part of the down payment. If you do not purchase the house however, then this fee becomes income for the seller.
Another thing that any interested buyer must also know the pros and cons of rent to own homes. Here are some of the advantages and disadvantages:
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You will then have time to build income and repair your credit history during your renting phase.
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You can walk away from the agreement and leave the house altogether if you find something terribly wrong with the place, though this depends on your terms stipulated in the contract. However, when you do this you will lose the option fee and all the extra amount of rent that you paid for the down payment.
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Whether you like it or not, you will still pay the option fee. Though this goes directly to the down payment if you choose to buy the house, but the amount is usually ten percent of the price of the house. This may be too big an amount to come up with at the start.
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A rent to own lease must pay the rent all the time, every time, and always on time. If you fail to do this, you will be fined and you will not have the down payment on those must you missed or paid the rent late.
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Depending on your contract, the renter will have all or part of the responsibility to deal with problems such as repairs, maintenance, and other damages even during the renting period.
Now that you have the knowledge need to enter a rent to own home deal, you can now start looking for a rent to own home just about anywhere. Here is a list of few cities with rent to own homes:
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Rent to Own Homes