Should I Rent-to-Own?

Posted by on Mar 8, 2016 in Uncategorized | Comments Off on Should I Rent-to-Own?

rent-own-home-dayton

These homes offer a way for people who can’t qualify for a mortgage (for whatever reason) still be able to purchase a home. There are many reasons a person can’t get approved for a mortgage that go beyond a credit score. A person can have excellent history, but no previous debts showing that they can make payments, or a short credit history in general which makes bank lenders apprehensive to approve a loan. Rent-to-Own homes allow these people to rent a home, in which the money goes toward purchasing it.  This method of purchasing homes has been around for a while, and isn’t going anywhere. Find out more here However, this method usually works better in the sellers favor than the renter. However, it can be a great idea; here’s why.

Sometimes, you are very close to being able to get a mortgage. Perhaps you had a short credit history, and now its grown. Perhaps you did get that auto loan, and have a long history of on-time payments to show. If this sounds like you, renting-to-own may be a good idea, as this describes the ideal rent-to-own candidate. This will give you time to continue improving your credit report, and by that time, you’ll be in a position to afford a mortgage for the rest of the home.

When you decide to take on this endeavor, you will be paying a fee to the landlord to show that you a re going to purchase the house at some point; don’t expect to get this fee back. The reason a deposit is given is that in many of these cases, the tenant/to-be-owner, moves out before they purchase it.

This is unfortunate, because all of the payments you’ve made literally went toward nothing, and your deposit is forfeited. You’ll have lost even more money than if you had rented, because with rent-to-own, the rent is higher than it is with a standard leasing situation.

Rent-to-own is not yet as strictly regulated as the regular buying industry. It does benefit the seller and buyer, as they are each able to designate their own terms and come to their own agreements. However, it makes it easier for owners to take advantage of the buyers who don’t really know what they’re doing. You should always advise a real estate attorney if you are considering this method of purchasing a home. There also is not a lot of information online or in books that describes in detail the rent-to-own process as there is with traditional home buying.

The Bottom Line

This method of buying a home is not everyone’s favorite, which is why most people like to wait until they are able to have a bank approve them for a mortgage, and buy a home the traditional way. There are some great benefits, but there are some terrible pitfalls. However, there are many things to weigh. Only you can decide, but do spend time researching whats out there, and thinking seriously about it.

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