What You Should Know About Renting To Own

A lot of people don’t think they can own a home of their own and have to rent. For many people, the option of buying a home may not be as far off as they may think. Even though you may not have the money you need to make a down payment, you may still be able to own a house if you choose a rent to own option. However, before you decide on this particular option, there are some things you should know.

First off, you need to understand what rent to own or lease to own is. It is an agreement that certain tangible property, such as furniture, cars, or houses, can be rented out for a certain period of time. After that period of time, which is normally outlined in the agreement, the person then has an option to purchase the item they have been paying rent for. When you enter into this type of agreement there is no obligation that you have to purchase at the end of the specified term.

There are a few reasons why someone my want this particular option versus just renting or flat out buying. The most obvious reason is that you may not have the amount of money you need to put a down payment on a house, so when you do the lease to own option, you can slowly pay the down payment. If you have bad credit and wouldn’t qualify for a home loan, then this option gives you a chance to repair your bad credit. Since you will be making monthly rent payments, your will be able to build your credit up and boosting your score.

Before you sign any type of agreement, whether you are just leasing or want to eventually buy, be sure you understand any and all of the terms. For these types of situations, the monthly rent and term for payment should be clearly stated in your lease. It should also tell you how long you are expected to pay your monthly statement until you can opt to buy the property. The lease should also state how much of your rent per month will be set aside as a down payment and how much will be considered as your monthly payment.

There are some downsides when you enter into this type of option. You will probably end up paying a lot more than what the item is worth. This is the case a lot of times with furniture or electronics, but with homes, you will have to think about if you will be losing money or not. If you had already planned on renting then you probably aren’t out too much. You will be agreeing on a price that will be set partially on today’s housing market, but paying it later. Houses do depreciate over time, so you may be shelling out more than it’s worth.

If you have any questions, you can always talk to a trusted lawyer or financial advisor to see if you are getting a good deal or are being scammed. You may also want to talk to your insurance company to see if they have home owner’s insurance policies that will cover you while you rent and when you own. If not you may have to compare different insurance policies to get the insurance you need.


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