Many people still ask the question, what is rent to own? Despite being a large market there are still those who do not know of this. A majority just find out about this when they have moved and decided to get rid of their old home.
Rent to own, or lease to own, is a process in which the house is rented for a certain period of time, just like normal rent. But the renters have the option to buy the house after the period of time that is stipulated on the contract. Each month the renters pay is an income to the seller, and there is a portion of that rent that goes to the deposit to the down payment of the house. This is what rent to own is all about.
Before a contract is being signed, both the renters as well as the sellers should make a clear agreement first about this kind of deal so that things would flow smoothly. This should be done because there are possible advantages and disadvantages if you are involved in this kind of business. Part of the good things would surely benefit the seller. In this case, this may lessen the expenses since it is okay not to pay the mortgage of the two houses together. Good thing for the buyer is that they could have the unit as fast as they wished with the desired type they want at a lower cost.
Advantages and disadvantages that buyers could meet when the rent to own home:
Buyers have the time to save up to buy the house altogether as they rent.
Buyers can still walk away if they decide to find another house or find something wrong with their current rent to own home.
The renters have to take care of the expenses in repairs even if it is not their responsibility.
Buyers always have to pay an upfront fee. It is usually a percentage of the agreed selling price and this money goes directly to the down payment, but it is sometimes difficult to come up with this amount.
Now here are some advantages and disadvantages the sellers would have when having their home in a rent to own contract:
If home prices are dropping the seller can always have a higher price range at the start of the agreement.
For those renters who are looking forward of owning the unit in the near future where they are renting as of the moment, would really take care of the unit like their own.
If there is an interested buyer who has the desire to buy the unit in a much better price, then the seller could not do anything about it since they get involve in the contract with the renter.
Now that you know what is rent to own all about you now have a broader perspective. If you are a home owner planning to put up your house for rent to own then you now have a clear picture on how to get things going. The same goes if you are a looking for a house but cannot afford to buy one at the moment. You also have an idea of the pros and cons of the deal.
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