A rent-to-own home sometimes referred to as lease-to-own home, at its core, is a home that you would rent for a specific period of time. At the end of the rental period, you would buy the home when your lease term expires. As you make rent payments during the lease period, a portion of the rent you pay to the homeowner goes towards the down payment on the home. You have the option to use the money that’s accrued to buy the home at the end of your lease period. The rental lease terms may be for a year or a few years depending on the agreed upon terms. You may be thinking this sounds great, how do I get started? Or, this sounds too good to be true, why isn't everyone doing this? Well, Let's dive into some pros and cons of the rent-to-own world.
What Are The Benefits
Of Rent To Own?
- It allows you to save money for a down payment on the home. As stated earlier, a portion of your rent payments are set aside and saved to be used to purchase the home. It also allows you to live in the home first to ensure it will be a good fit for you. Renting-to-own can be a great way to save money for a down payment and give that home a test drive to make sure you like it.
- You can save on repair costs. While most agreements share repairing responsibilities between the parties involved (tenant(s) and the landlord. You may agree to cover any small repairs while your landlord agrees to cover the larger ones. This can be beneficial if you wish to purchase a home but don’t have enough money to cover large repair costs associated with home ownership.
- It offers flexibility in that you have the option to either buy or move, at the end of the lease. When the lease period ends, you have two options: you either can buy the property, or, you can move into another one. If you decide to make a purchase of the home, you’ll get a home loan through a qualified mortgage lender, and follow the standard home buying process. Any money that you’d accrued in a down payment will go to your lender.