Posted: 22 December 2017
Are you among the 72% of U.S. renters who would like to buy a home but are not sure if you’re ready?
Perhaps you don’t have the finances or are not sure if you should make the commitment right now. Well, there is a great option for you.
Renting to own is a unique way to start investing in a home you would like to eventually buy.
There are many benefits to rent to own homes. Keep reading to find out why this may be the perfect option for you.
What is Rent to Own?
Rent to own is basically what it says! It allows a renter to pay monthly for a home that they would like to buy at the end of a specific amount of time (e.g.: two years).
With a renting to own, the owner and renter agree to a purchase price at the beginning of the contract.
The owner typically adds on a purchase option fee to each month’s rent that will go toward the down payment on the home. The fee can vary from 1% to 20% of the rent.
Benefits for Buyers
Choosing a rent to own home can make it easier for you to purchase a home, give you time to decide if homeownership is for you, and ultimately save you money.
Downpayment Made Easier
Rent to own is a great option for those who need time to accrue a downpayment. Since the monthly rental price includes the money toward the downpayment, you don’t have to stress and worry about saving and budgeting for a home separately.
Time to Fix Credit
Another huge benefit is time. Renting to own gives the renter time to improve their credit before applying for a mortgage loan.
Showing the seller over time that you are reliable and dependable will also play a role in purchase restrictions.
When a home is sold by owner, the seller has control over the requirements of the buyer. They may lessen the minimum credit requirement after they have seen you always pay your monthly rent on time.
Most rent to own contracts decide on a fixed purchase price of the home. This price will be determined based on the appraisal value at the time of the contract.
This means that if the housing market in your area is on the rise, you can secure a purchase price much less than what the home may be worth in a couple years.
Research the housing market in your area to see if renting to own may benefit you in the long-run.
If you live in the three states with the current highest market increase–Washington, Utah, and Oregon– then renting to own is a great option for you.
Check out these Utah rent to own homes that are estimated to increase in appreciation by 5% in the next year.
The buyer doesn’t technically own the home while renting. This means they don’t have to pay all those extra costs that come with homeownership.
You don’t have to worry about paying property taxes or purchasing home insurance.
If your contract keeps the owner in charge of home maintenance and repairs, then that is another area of savings for the buyer.
Plus, renting to own means longer-term lease agreements. You won’t have to worry about the hassle of moving costs next year.
Purchasing a home is not a small deal. It is a huge commitment. With the rent to own option, buyers have the chance to test out homeownership before deciding that the home and/or the ownership is right for them.
Maybe you are not sure if the area will work for you and your family?
Perhaps your job may transfer you elsewhere?
Or, maybe you don’t know if being responsible for a home is something you’re ready for.
Whatever the case, renting before owning is a great way to figure out these questions and ensure that you’re ready to buy a home and buy this specific home.
If your contract allows it, renting before owning will also let you try out the freedoms that come with homeownership, such as painting, decorating, or upgrading the home.
Benefits for Sellers
The advantages of renting to own homes aren’t just for the buyers. Sellers can reap many benefits as well.
Extra Monthly Income
To start, sellers are getting extra earnings each month from the option to purchase fee.
If the renter decides not to buy the home, the money received from purchase option fee is non-refundable. The seller gets to keep it along with all the rent that has been paid.
Rent to own buyers are more likely to agree to the full asking price of the home. Renters know they are getting a secured purchase price and assistance in paying for the home’s down payment.
This is especially beneficial for sellers who may be in declining housing market. The secured price may lead to a purchase higher than what the home will be worth in one to three years.
The owner is essentially selling the home by his or herself. There is no need for real estate agents and advertising and all the fees the come with them.
The owner can also save money on the home itself by renting to people who think of the home as their own. Reliable renters will lessen the risk of home damage.
In addition, renters who are becoming buyers can agree to be responsible for the home while renting. This means repairs and appliances.
Rent to own sellers are marketing to both renters and buyers. This means a larger market and more options to get money rolling in.
Are you Ready to Rent to Own?
As you can see, there are numerous benefits to renting to own for both the buyer and the seller.
Despite your financial situation or home style, there is a perfect home waiting for you to invest in.
You’ll be set for both renting and home owning with all the useful home tips from Blog Giveaway Directory.
You can also win free items and gift cards to fill your new home with!