Rent-To-Own Homes

With the Economy plunging down and showing no signs of quick recovery everyone are scratching their heads to find the smallest ways to save that precious penny. In this scenario the dream of numerous Americans to own a beautiful home seems a farfetched idea. But one does not need to lose heart. As the saying goes “Where there is a will there is a way” Lease-to-Own Homes is the latest buzz in the Real Estate market.

Lease-to-Own homes or Rent-to-Own homes is not a new concept. It was something which always existed but no one felt the need to go for that option since they felt buying homes was affordable and convenient. But now with the market crunch, lease-to-own homes are the most desirable option to own a house. Many of you must be familiar with the term “Lease” but may not be clear about the concept of lease-to-own homes.

Lease-to-own homes involves a contract in which you can occupy a house as a tenant and have the option of purchasing that particular house in the future at a price already agreed upon. This simply means that you have the advantage of “trial stay” in the house which you would eventually buy and at the same time you need not break your head of gathering lump sum money to purchase the house. You may wonder how this is possible. As per the guidelines of lease-to-own homes, the tenant or buyer needs to pay an “option amount” to the owner. The owner may use part of this amount towards the down payment at end of the lease contract period. Apart from this the buyer need to make monthly payment for a fixed duration of the contract period which is usually between 1 to 3yrs. The monthly payment is like rent but the amount will be higher since a portion of this money is meant for the down payment required when purchasing the house at the end of the lease period. For example if the owner charges a rent of 1000$ as per the market price then he may charge another 200$ extra i.e. you may have to pay 1200$ per month wherein the additional 200$ goes to the down payment credit. This way you don’t have the burden of arranging the entire selling price of the house at one go. You can always manage to accumulate the required money to purchase the house during the lease period and also have the down payment credit which reduces the overall cost of the house.

It is always advisable and safe to go for a formal contract while opting for lease-to-own homes. You must be clearly aware of the agreement details like lease period, monthly rent and agreed upon sale price. The buyer may greatly benefit if the Real Estate market goes up when the lease period ends since he will have to pay the agreed upon selling price of the house at the time of making the contract. Similarly the buyer may also be at a loss if the market goes down. If the buyer is in bad financial condition then longer lease period will help to repair the damage and recover but otherwise one can opt for the shorter duration especially if the Real estate market is doing well.

If by any chance the buyer decides not to purchase the house after or during the lease period then he will lose the down payment credit to the owner. This acts as a compensation for the owner for holding the house during the lease period without selling it to others. Overall it is a win-win situation for both the buyer and the owner in this period of fiscal turbulence.

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