Ever since the housing market crash of 2008, more and more home sellers are finding creative ways to market their homes to perspective buyers. One of the more creative financing options that has come about as a result of the saturated home selling market, is the rent to own financing option.
While this exact method has been used since the late 1960s, it is gaining in popularity because it offers a win-win situation for both the home buyer and the home seller. That being said, very few prospective home buyers are aware of this particular option.
This article will help you to decide if the rent to own option is right for you.
What Is Rent To Own Exactly?
Before considering the rent to own option as a means to finance your next home purchase, it is important to understand some of the finer points of the actual contract that you could potentially be entering into.
With the rent to own option, home buyers are able to enter into a contract with the homeowner which allows them to move into the home and make monthly rental payments with an additional fee that goes towards the purchase of the home.
For example, a rent to own leasing option may require a $1000 per month rental fee, plus a $300 per month rent to own rent credit. The $300 per month goes towards the payment of a down payment, or directly to the purchase of the home (the equity).
The major downside to the rent to own option, is that if you decide not to purchase the home after the initial contract is up, the extra fee, the $300 per month in the above example, is usually nonrefundable. The rent, of course, it is nonrefundable as well.
The best way to minimize this potential downside is to simply be more sure about your decision to purchase the house in the long run.
Some individuals decide to use the rent to own option to buy themselves some time to repair their credit or come up with the down payment. This is a perfectly fine option, but those who decide to use rent to own for this purpose need to be aware of the possibility that they are unable to get their finances in order. As stated above, they would lose the money that they spent on the extra fee if they were unable to come up with a loan.
Who Should Buy Using The Rent To Own Option?
The rent to own option is certainly not for everybody, but it can offer a great deal of benefits to those who pursue it.
Those with bad credit, and those without the initial money for a down payment, are great candidates for the rent to own option. Why? Because the rent to own option allows perspective home buyers the opportunity to repair credit and build their down payment while actually living in the house that they intend to buy.
Deciding if the rent to own option is right for you is an important decision to make. There are downsides and up sides to this particular option.
If you would like to take a look at some of the kinds of homes that are available for purchase, with a rent to own option, check out some of the listings on our site at RentUntilYouOwn.com.