Did you know that you could become a home owner even if your credit is less than perfect, or you don’t have a large down payment? Thanks to Rent To Own, your days of moving from one apartment to the next can be over. Although you may have heard of Rent To Own, you may not know exactly what it is. The following information will help explain it to you. With a Rent To Own property, you agree to rent your new home for a specific amount of time before buying it. The rental period can range anywhere from a few months, to multiple years depending on the agreement that you work out with the owner/seller of the property.
You will be required to make a deposit that ranges anywhere from 3-10% of the agreed upon purchase price before the rental period begins. The deposit is applied directly towards your down payment when you purchase your new home. That makes it a whole lot easier to come up with the down payment money. In addition, during the rental period you can work on fixing your credit so that you will be able to qualify for the mortgage to purchase your new home. By the way, the vast majority of Rent To Own buyers hire a professional credit repair agency to help them with this process.
It is a relatively small expense that’s well worth the money. With most Rent To Own program, you will be technically entering into a lease option agreement. With a lease option agreement you actually have the option of purchasing the property after the agreed upon lease period. The purchase price is determined between you and the property owner/seller before you sign the lease option agreement. The purchase price is typically based on the value of the property at the time you are signing the agreement. This is an area where many Rent To Own buyers have a significant advantage.
This is due to the fact that real estate prices have been going up steadily in recent times. For example, if you agree to purchase the home for $250,000 in the lease option agreement under a three (3) year lease period, the property may very well be worth $300,000 by the time that you’re actually purchasing it three (3) years later. That means you gain the difference. In this example, you’re buying a house for only $250,000 that is worth $300,000. The length of the rental period and amount of the monthly rental payments are also negotiable and determined before the lease option agreement is signed.
If you decide to purchase the home after the lease period has concluded, you will secure financing and close on the sale much like a standard house sale. Your lender will set a closing date, you will sign the mortgage and other ownership documents at that time, and become the legal owner of the property. The 3-10% deposit that you made when entering into the original lease option agreement is credited towards your purchase price as part of all of the down payment depending on your mortgage terms.
Your Home Solutions Group has been involved in real estate and real estate investing for the past thirty (30) years with an emphasis on Rent To Own/Lease Option transactions for the past eleven (11) years. Although owning a home of your own may be the American dream, buying a home can be a complicated process for many reasons. That is why we take great pride in providing you with a unique solution that puts far more people on the path towards homeownership. Contact us today to learn more.