You have probably heard about Rent-to-Own properties and wondered if it’s a good idea. You might think, I am already paying rent so why not?
Well, there is more you should know before committing to a Rent-to-Own Home.
A rent-to-own home is a house you may buy through a Rent-to- Own agreement. With this type of contract, you agree to lease a property for a specific time period before gaining ownership.
The time period can range from numerous months to several years, relying on the specifics of the contract.
As a part of the contract, the vendor preserves a designated amount of money of each monthly payment to head toward the buyer’s equity within the domestic once they purchase it.
There are two different types of rent-to-own agreements: a lease option agreement and a lease purchase agreement.
With a lease option agreement, you have the option to buy the house after the agreed-upon time period, or you can walk away if you decide not to buy.
If you go with a lease purchase agreement, you are legally obligated to buy the house.
And what if the customer doesn’t turn out to be buying the house?
Let’s say a job opportunity comes up and you are required to move out of town, or maybe you can’t afford the mortgage and aren’t able to buy the home, perhaps you just determine this house isn’t for you.
In case you’re in a lease option agreement, you can stroll far from the settlement. But what is gonna happen to the money you have been putting into the equity? That’s hundreds and maybe thousands of dollars you won’t get back.
If you need time to straighten up your finances, that’s ok! There’s no shame in renting and saving money.