How Does a Rent to Own Lease Work?
It would be a bit of an understatement to say the housing market was affected in some way over the course of the pandemic. What we’re left with today is a dearth of homes available, mass migration in and out of different locations, and buyers who’ve had time to add to their savings now looking to purchase homes—all at the same time. The upshot is that in many locations, the housing market has become super competitive and it can be tricky to get a foot on the property ladder.
For this reason, options like the rent to own lease are looking more and more attractive to those who want to become homeowners. If you’ve never heard of this type of financing before, it might be time to give it a closer look. Read on to learn everything you need to know about the rent to own lease agreement now.
Rent to Own Lease Agreements 101
The concept of a rent to own house is pretty straightforward and even self-explanatory. But for those who aren’t already familiar, let’s take a look at how it works.
In a rent to own agreement, the tenant commits to renting a property for a set period of time. Then, after the stated time period is up, they have the option of buying it. A standard lease agreement and also an option to buy the property at a later time are the two components of a rent to own lease.
Each rent to lease agreement will be slightly different, however. In many cases, a portion of each payment of rent is applied to the eventual purchase price. This means any rent you pay is going toward buying your home—similar to how a mortgage would work.
Advantages of a Rent to Own Lease
Normally, when a person wants to buy a house, they need to approach a bank or other lender and secure a mortgage. The problem is that mortgage candidates need to fulfill certain requirements which many people are not able to. With a rent to lease agreement, you’re able to overcome this initial hurdle.
As well as this, rent to own leases can often be flexible and consumer-friendly. For example, depending on the terms you’ve agreed upon, your contract may give you the right, but not the obligation to purchase the property at the end. This gives you time to think about what you want and the freedom to walk away if you wish.
Be sure to read the terms of your lease carefully before signing. Some rent to own agreements are less customer-friendly than others.
How to Do a rent to Own Lease
A rent to own lease can represent an amazing opportunity for those looking to become homeowners. If this is an option you’re considering, be sure to always be aware of the terms of any contracts before signing. If you’re looking for more property advice, check out the rest of our content now.