What Is Rent To Own?
Rent to own is also commonly called lease options, rent with an option to buy, or sometimes lease with an option to buy. The rent to own concept is basically a way for someone to sell or buy a home without having to go to the bank or mortgage lender. It allows many people the option to own a home who might not qualify for a traditional mortgage. It’s also good for the sellers because instead of having their home sitting on the market for many months, they can have a source of income from a serious tenant. They are also more prone to sell the home quicker and it puts their home in front of more people.
How does it all work?
First, the seller agrees to lease out the home to a buyer who has the option to purchase the home after a certain time period. If both parties agree to all the terms then it is understood that the buyer (also known as the lessee) will lease the home from the seller for a certain amount of time while the buyer works on their particular financial situation to qualify for a mortgage. The seller cannot sell the home to any other party during the term of the agreement, unless the buyer defaults. When the time has ended, or at any time the buyer qualifies, the buyer obtains a mortgage and buys the home from the seller. If they do not purchase the home by the end of the agreement, all money paid is forfeited as rent.
7 Advantages For The Buyer In A Rent To Own
- Rent to own beats the non-private, traditional apartment setting.
- Build up down payment money and credit all while living in your dream home.
- The option to buy is up to the buyer. If the market changes, the buyer can change with it.
- Even if a buyer doesn’t qualify for a conventional mortgage, they can still live in a home.
- The properties are often in much better shape than traditional rentals.
- You don’t have to move twice.
- Buyer’s do not have to wait long to move in. The homes are usually move in ready.