Keyword(s): rent to own
Want to have your own place, but you're short on money?
Or maybe you wish to know more about the neighborhood before actually moving there?
That house you're interested in might be the most beautiful thing you’ve ever seen. But what if something goes wrong?
Two years from now, you might get fired and lose your income. Or you may find a great job opportunity abroad.
Additionally, the costs of home ownership can be overwhelming. Home insurance, utilities, mortgages, property taxes, appliances, and house repair are not cheap.
If you're unsure about it, consider rent to own. This agreement allows customers to rent a property, with the option to buy at some point.
It also gives you a chance to "try out" the property before buying. In case something goes wrong, you can always change your mind.
Sound interesting? Here are some tips to help you decide whether rent to own is your best option:
How Rent to Own Works
Rent to own programs have been around since the '90s. Under this type of agreement, you pay a one-time, non-refundable fee plus monthly rent.
The initial fee ranges between two percent and seven percent of the sale price. It is also known as option consideration or option deposit.
If you decide to buy later, the upfront fee plus a part of all rent payments will go toward the sale price.
The money you pay each month will lay a foundation for your future instead of vanishing into thin air.
No two contracts are the same. Some require tenants to pay for repairs, property taxes, and home insurance. Others require sellers to cover these costs.
The contract may forbid pets or smoking in the house. If you break these rules, you can be forced to move.
This kind of agreement should state who's responsible for maintenance and repairs. Painting the walls or mowing the lawn is not the same as replacing the heating system.
Is This Option Right for You?
The number of young people who own a property has fallen to a 30-year low. Most millennials prefer to rent a place or live with their parents.
If you're already paying for a car loan or business loan, purchasing a house can be risky. Unless your savings account is bulging with six figures, you may not be able to keep up with payments.
Things are even worse for those with bad credit or no credit history at all. However, they can still apply for rent to buy programs.
This option allows tenants to work on improving their credit scores and apply for personal loans before the lease ends.
Rent to buy programs also give you the advantage to lock in the price and buy a home for less. Why pay more later when you can secure the lowest price right now?
The best part is that you'll have plenty of time to explore the area while learning the ins and outs of the property.
So, are you ready to apply for a loan and rent to buy your dream home? Search and compare financial products in your area to make an informed decision!