When it comes to home ownership, renting to own is when a property owner agrees to rent the home, and then you, as the renter, have the option to purchase the home at a future date. In most cases, you will sign a contract stating that you will purchase the property at a specific date. Because of the struggling economy, many people today are now choosing the renting to own option, and there are many benefits of renting to own a home.
One of the main reasons that you might want take advantage of the rent to own option is that it will give you time to save money for a down payment. Down payments are usually required when purchasing a home; therefore, when renting to own, the down payment required is much lower.
Rent to own could also give you time to repair your credit score. If you do not think that you will be able to qualify for a mortgage because of a low credit score, renting to own can help you have time to raise your score and repair your credit. The renting period normally usually lasts for two to five years, so you can pay your bills on time, reduce your debt and increase your score.
Before you start renting the home, you can lock in the price and terms of the deal. If you decide you do not like the home, you can get out of the contract; however, you probably will not get a full refund. If you begin renting the house when the market is down, the property value might be higher when you actually purchase the property.
When you purchase a home, closing the closing costs could be expensive. If you rent to own, you do not need to worry about the closing costs. The arrangement with your property owner is set, so there are no extra costs involved. In some instances, the property owner will even use the money that you have paid to rent the property as payments toward the price of the home.
The mortgage process can be very lengthy; however, after you rent to own, you can own the property fairly quickly after the renting period is over. You will not need to go through the application process because you already have an agreement.
Because you will have fixed monthly payments, you will be able to budget accordingly. You will know exactly how much money that you will need to pay each month, so there will be no surprises. Your rent will not increase while you are renting.
It is important that you read the contract fully before you agree to rent to own, so you will be aware of the terms. The terms should include the price, amount that will be contributed toward the purchase price, interest rate and expiration date.
Renting to own a home offers many benefits for a home buyer. After the renting period expires, you should then be ready to purchase the home of your dreams.