We all dream of one day becoming a homeowner; however, for some of us the dream might be a little harder to assume at first. Thankfully, there are rent-to-own programs available to assist people in this situation in being able to realize their dream of homeownership.
What is Rent-to-Own/Lease to own?
- This is when the people who sign a rental/lease agreement on a home sign an option agreement that allows them the limited option to purchase the property over a predetermined time frame that is mutually agreed upon.
- The rent-to-own option is an outstanding opportunity for people with a less than perfect credit history or insufficient employment history and cannot qualify for a traditional mortgage to become homeowners.
- When signing a rent-to-own agreement, the purchase price of the home is definite from the start of the lease period; the primary Option fee you pay as the tenant-buyer is a 100% credit that goes toward the impending purchase of the home once you are able to become qualified for financing at the end of the lease term.
- With a rent-to-own option agreement you can evade the chance of paying up to 35% down payment that many lenders necessitate a person with insufficient credit history to pay. By choosing this lease option you get the opportunity to improve your credit rating and therefore be able to get an approval from and “A” lender, resulting in a lower rate of interest.
- When entering into a rent-to-own option agreement there is typically a “monthly option fee” that you are required to pay; this fee is then attributed to when you are ready to complete the purchase of the home at the end of the contract period.
- The rent-to-own program allows a person to establish a plan for reserving the cash needed to make the home purchase; while rebuilding or establishing the sufficient work and/or credit history needed to qualify for a traditional mortgage.
- While in a rent-to-own agreement option you have the added advantage of living in the home you wish to purchase.
Things to Beware of in a Rent-to-Own / Lease option purchase:
When deciding to take the option of renting to own your home there are a few things you should be wary of. As with any purchase offers there will be someone out there that just wants to make a “quick buck”. This is what separate the legitimate from the less than favorable investor that is looking to make easy money in the hopes that the homebuyer will default the agreement and the homeowner will be allowed to keep all that cash that was deposited upfront.
Ensure the Rent-to-Own agreement is signed by all parties involved:
This is so crucial when starting a lease option agreement. It is imperative that all terms of the agreement are plainly clarified in the communication documents between the owner (investor) and the probable homeowner. This agreement is to be made fair and examined closely by each participant’s attorney to ensure that both party is aware of all stakes involved, a refund policy that may exist regarding the first deposit as well as any extra monthly payment reimbursements.
If all this sounds like something that would suit your family and current life situation perfectly, give the experts at Homeowner soon a call and schedule an appointment to talk to a representative right away about how you can make home ownership soon something in your future.