Rent to buy homes are properties that you can move into on an immediate basis by paying rent, and later have the opportunity to buy the house from owners (if you want). There are several reasons why this form of deal is suitable for both the buyer and seller. Let’s break down how this process works.
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The Process of Rent to Own Agreement
Here is how the agreement is structured for rent to own homes:
No need to get a mortgage
Are you looking for a place to live and hoping to buy it in the future? Then the first step you can take is to explore your options and find a place that is suitable for your requirements. The next step is then to ask a bank for a mortgage. Unfortunately, not everyone gets approved for a mortgage, but it doesn’t mean you cannot get your dream house. With rent to buy an option, you can stay optimistic about being able to afford your own house.
The seller gives you the option
Once you have finalized the decision of which house to buy, its current owner will offer you to move into the house as a tenant by paying the monthly rent, with an option to buy the house in future. A good thing about this agreement is that you are not obligated to buy the house. If you want, you can walk out the deal.
The rental agreement
The next step in the procedure involves the rental agreement and paperwork. It also involves paying the cash for the option to buy. The cost of the option to buy part of the agreement is decided by both parties. The percentage of the cost can lie somewhere between 2% to 7%. It varies with each agreement.
Deciding the Details
At this point of agreement, we will suggest specifying all the terms and conditions for your house for rent in Albany WA. The main factors that you need to decide at this point include,
- What will be the monthly rate for paying rent?
- For how long the rental agreement will be valid (e.g., 2 years)?
- How much credit will be paid from rent to purchase the house?
- What will be the cost of the option to buy?
- What will be the expiration date for the cost of the option to buy?
- What will be the cost/penalty of ending the rental agreement?
The list can include other terms and conditions as well that the buyer or seller feels are appropriate.
The Benefits of Rent to Own for Buyers
This option is great for buyers who are expecting to have a good financial position in a few years. Some of the benefits of rent to buy homes include:
You can buy with bad credit
People who couldn’t get clearance from banks to get a mortgage can utilize this option. Over time, they can try to improve the credit score, so they get approved for the loan when it is time to buy the house.
You can lock in the price
This agreement allows the buyer to convince the seller to sell him the house at today’s price with the purchase taking place several years from now.
Helping in Building Equity
Technically, renters do not build as much equity as homeowners, but still, this agreement can help in providing a substantial sum for house purchase.
You can have a test drive experience
Rent to own allows the buyer to see how their life would be if they live in the house. If it is not suitable they can change their decision before it is too late.
Before committing, it is best to take advice from the experts in rent to own agreements. Companies like Stop Renting Albany can help you in making the decision based on your current financial status.