Why rent to own a home?
Rent to own is a flexible option for those who want to own a house, but their financial situation does not support their dreams. Their bad credit does not make them eligible for a mortgage. They also fail to arrange the finances through other means.
You have two options with a rent-to-own agreement:
- Lease option
- Lease purchase
Lease option
The lease option is a more flexible choice. You enter into this agreement by making a non-refundable downpayment. Then you make periodic rental payments. Any additional amount you pay in monthly rentals adds up to home credit.
With the lease option, you have the choice to buy the house at the end of the lease term. It is not mandatory. But if you can’t manage to buy the house, you lose the downpayment and home credit.
Lease purchase
Buying the house at the agreed date is obligatory if you sign a lease-purchase. You only go with this option if you are sure that you can arrange finances at the due date. In case of failure to comply with terms and conditions, the landlord may sue you for damages.
Either way, the tenant and landlord must decide a few things in advance. First is the property’s final price at the time of acquisition by the tenant. It can be agreed upon in advance or decided at a specific time.
The agreement must also stipulate the procedure to determine the price in future. It must also mention whether the tenant will acquire the place in its existing condition or with an upgrade.
What are the benefits of renting to own?
It is a highly beneficial option for those who want to own a house but don’t have money to pay for it.
Can’t qualify for a mortgage
You need a good credit score to qualify for a traditional mortgage. A low credit score makes you a riskier venture for the lenders, who may deny you the credit facility.
Several factors combine to make up your credit score. These include your payment history, available credit limit, credit mix, etc. If you have bad credit, it shakes the confidence of lenders.
Those who want to buy a house but bad credit proves the hurdle should explore the rent-to-own a home option. It enables you to rent a place before eventually buying it.
Like a house but can’t buy it
You may like a house, but your finances don’t allow you to buy it. You also know that if you missed this opportunity, you might not find such a lavishing house in a comfortable neighborhood again. In such a scenario, rent to own a home is the best possible option.
Under this option, you rent a house with an agreement to buy it at a specific time in future. It prevents the seller from selling the home. It also gives you the time to arrange the finances.
Trying out the neighborhood before purchasing a house
Rent to own a house is also the best option for those unfamiliar with an area. They don’t know the neighborhood and are unsure whether they will be comfortable in this environment. It gives them a chance to occupy the house on a trial basis.
If they find the place suitable, they may make it a permanent residence.
No need to move out frequently
You develop a bond with the place where you live for some time. When you leave that house, a feeling of loss overwhelms you. You also lose the friendships you make during your stay at a place.
It is also an overwhelming task to move your belongings too frequently. You may damage them during the shifting process.
When you move to a new place, it needs time to settle down and get back to normality. You may fail to feel at home in that place. It impacts your productivity and makes things annoying.
Rent to own a house is the solution to all these problems. With an agreement to buy the house in future, you can secure your favorite place.
Best tips for renting to own a house
Before you sign a rent-to-own a house agreement, you need to ensure the following:
Lease option vs lease purchase
If you are unsure whether you can buy the house at the end of the lease term or not, go with the lease option. A lease purchase makes it legally binding to buy the house at the agreed date. Otherwise, the owner may sue you for failing to fulfill the agreement.
Read the contract thoroughly
Before signing the agreement, it is compulsory to read the contract meticulously. Renting to own a house is vastly different from simply renting a place. You must understand every term and condition and agree to them consciously.
Get a home inspection
It is also a reasonable option. When you get a home inspected by an expert, it ensures that there are no irreversible flaws in the building. The owner of the house bears the cost of this inspection.
If you are to own a place eventually, you need to ensure that it will not cost you a fortune in repair and maintenance.
Lock in the price
The prices of property mostly go up with time. Rent to own a house gives you the option to lock the price. It enables you to buy the place at a more favorable price, even if the rates go up in the market.
Alternatively, you can always walk away without penalty if the prices go down. But you will lose the downpayment and any extra rent you paid as home credit.
Repair and maintenance
You need to have a clear understanding of the terms and conditions. The agreement must explicitly state who will pay for repairs and maintenance. Usually, it’s the landlord who pays for these expenses, being the owner of the house.
You are not responsible for these expenses unless you have exercised your right to buy the house.
Any essential clause of the agreement
There may be a condition in the agreement that can strip you of the right to buy the house. For example, one missed payment can make the contract void. Ensure that you never violate any such terms and conditions.
Why us
We are a real estate investment firm. We assist people in selling or renting out their properties. If you can’t find a buyer or tenant, we can help you.
Also, if you are a buyer searching for rent to own a house, we can accommodate you in a comfortable place.
Contact us today.
Website: https://www.nearentalproperties.com/
Email: loganlee@nearentalproperties.com
Phone number(870) 761-5043
Address:501 W Franklin St Marmaduke AR 72443
