Rent to own arrangements offer a great opportunity for people with bad credit to buy a home. They can also be utilized by individuals with no credit and/or folks that want to go through less red tape in the mortgaging process. With rent to own houses, there are no embarrassing credit checks. What matters is ones ability to pay.
How Do Rent to Own Arrangements Work?
Rent to own arrangements can be found in newspapers or classified ads. Note that for both venues, they may be referred to as lease to own. In any case, after you peruse all of the rent to own listings available, you should contact the seller. During your conversations with him or her, you will have to negotiate a price, similar to what you would do if you were buying the home outright
The next step involves the seller specifying a designated rental period. The time frame for this period ranges from 1 to 3 years. Either way, when the rental period is up, the tenant must decide if they want to purchase the home. The rental payments then convert into a mortgage, usually payable to the seller.
Now, regardless of which option a renter chooses, they must pay an option fee before signing a rent to own arrangement. This fee goes towards their down payment if they choose to buy. If they do not purchase the home, the money goes into the landlords pocket as it is a nonrefundable fee.
The Advantages
Cheaper - as With most rent to own arrangements, part of the tenants rent gets applied to their down payment. This makes the final purchase even cheaper than before. In the meantime, the tenant gets an opportunity to improve their credit, as all of their rent gets reported to the major credit bureaus.
You Know What You Are Getting - Unlike traditional home buying, rent to own arrangements allow tenants to try out their homes before purchasing them. If they do not like the property, they can simply walk away from the deal. They will lose their option fee, but in exchange they do not have to keep an unwanted house.
Questions You Need to Ask:
You should know every detail of your rent to own contract, especially when it comes to how much you will pay. Ask about your option fees, rental payments and your eventual down payment. Also, you will want to ask about the house itself. Such questions could include the following:
- Is there anything wrong with the house? Get a home inspection to back up what your landlord says.
- Who will deal with maintenance problems?
- Can the tenant add onto the property during their rental period?
- What consequences will the tenant face if their rent is late?
- Has the seller initiated these types of arrangements before?
If everything checks out after questioning, you should go ahead with the arrangement on this website. By doing so, you will get the house of your dreams without worrying about mortgage companies, real estate agents or any of the other annoying elements associated with traditional home buying.
