Your guide to understanding rent to own agreements via @homebidz

Your Guide to Understanding Rent to Own Agreements

First Time Home Buyers Click Here

Having a rent-to-own house, the client pays an up-front option payment and makes routine lease payments with "lease credit" repayments built in. These somewhat higher payments in rent to own agreements accomplish two tasks:
  1. They let the customer to gradually build up a deposit, should they opt to buy the house at the conclusion of the deal.

  2. They "acquire" the right to possess that said choice.

This, like every other property purchase arrangement, is a lawful contract, providing the customer precedence over another involved party. Moreover, as the cost is normally determined in the time the buying agreement is signed, the purchaser is bound to the cost agreed up on, even though another purchaser approaches the vendor with a higher bid.

Why Choose a Rent to Own Option?

When long term renting doesn't make sense anymore, and a substantial deposit is unavailable, lease-options (rent to own agreements) can solve the problem. The up-front option payment is normally significantly less than what downpayment would be. This is what makes them so appealing.

Who Benefits From Lease Options?

Both buyer and seller can really benefit from these types of contracts, since buyers will have little upfront payments, and sellers have a chance to earn some extra income while they lease their property. In the meantime, the equity on the said home or piece of real estate might increase, creating an opportunity for a higher price later -- this is not necessarily a good thing for the buyer, but fortunately these contracts generally provide an option to buy, not a commitment. This quote found on Trulia's website will give you an idea how it can work:
"I am about to close on my Virginia home and I feel it's been a great solution for both sides. My house had been on the market 2 years because of a new development down the street that had newer, bigger homes all in foreclosure that were a better deal. The buyer had a foreclosure on his record, and was in the mortgage time-out chair for another year. We agreed on a decent price for that time with a solid, non-refundable downpayment to ensure his performance. He paid my mortgage and handled all repairs, which was a welcome relief after two years of trying to sell. Now we're closing at a price that is 87% of current market value, which is a GREAT deal for him (though it doesn't make my old neighbors very happy!). I'm ok with it, because I collected the difference (or most of it) in rent over the last 15 months. Win-win..."
-Jim Olive, Agent, Key West, FL

Final thoughts

Rent to own options are great for people who don't quite have enough money for a down payment, or who need some time to build credit and save on interest later. They end up benefitting both buyers and sellers in the long run. So, if you think you're ready to buy a home, but you don't quite have the cash, start exploring rent to own opportunities today.

First Time Home Buyers Click Here

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