What is rent to own? It is latest trend in the housing market where people, no matter what their financial standing is, can own their own house over a period of time. This has become popular due to the steep prices of houses that were caused by the recent recession during the previous years. Though the economy is slowly improving, the prices of houses are still too expensive for the average American to buy outright. Although rent to own has been an old concept, it is only now that people are looking at it as an alternative way to get the homes that they feel they need.
If you are looking to avail of rent to own homes, you should need to know about rent to own homes works. Rent to own is like purchasing something on a down payment loan and renting a house. Confusing? It goes a little something like this. A rent to own agreement works when you, the buyer, avails of a rent to own home on the market by the owner or the seller. When you choose to pursue the deal, you and the seller must agree on the price of the property. You will need a lawyer to oversee the contract, because a contract is essential in rent to own deals.
What do you have to pay for in a rent to own? Once you have an agreement with the seller, you will need to know about the option fee and the rent premium. The option fee is the initial down payment or fee that you have to pay the seller. It is usually a fraction of the agreed upon price of the property, usually around ten to fifteen percent. It all varies on the contract. The option fee is mandatory. Another thing you need to take note of is the rent premium. It is just the same as paying for regular rent. The only difference is that you will pay a little bit more for your rent premium. This amount also goes directly to the down payment of your home.
However, take note of this important rent to own homes information. At the end of the contract, if you choose to buy the house, the amount you paid for the option fee and the rent premium goes directly to the down payment of the house. If you do not choose to buy the house at the end of the deal, then the option fee serves as payment to the seller and the rent premium are forfeited. In most cases, you cannot get a refund on the option fee or the rent premium, but sometimes you can negotiate to get a portion of the option fee. If you are lucky, the owner may even agree to return it in full. This has to be stipulated in the contract.
Anything else I need to know about how to rent to own homes? Yes, you need to know about the length of the rent period. This rent or “lease” period is the duration of how long you have to pay your rent premium. Most rent to own deals have a lease period of around one to three years. However, if you really have bad credit, or you really need to have more time to save up, then you can opt to have the length of the lease period longer.
Are these the benefits for rent to own? Yes. These are the benefits you can get in a rent to own home deal. For anyone looking for a home, especially those in dire financial straights and those with bad credit, rent to own gives them the opportunity to own their own house and build up their credit or save up. You will be able to pay a relatively smaller amount compared to paying for a new house, and you will be able to save up to pay the remaining balance at the end of your contract. This is how great rent to own is.
If you are looking for places that have rent to own homes, then check out this list:
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NJ
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Ga
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Tn
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Quad cities
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Ma
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Co
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Wi
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Pa
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Rent to Own Homes