Benefits & Drawbacks of Rent to Own | Geoff Brand Real Estate

If you?re considering buying a home, but just don?t have the financial resources, thenrenting to own may be the right option for you. For those who don?t yet have the money for a down payment on a home or don?t qualify for a mortgage loan, but are right there on the cusp renting-to-own or the ?rent to own? may accelerate the homeownership process.

In a lease option, you, the buyer, and the owner agree on a potential purchase date and?a price. Then you rent the property for a little more than the market rate, and part of the? rent is credited to the down payment on the home. You and the owner work out the length?of the lease?it can run for a few months or a few years?and you may purchase the?property at any point during that period. If you decide not to or are unable to exercise the option to buy, the owner is then free to rent or sell the property to someone else.

The ?rent to own? option benefits sellers in a number of ways, namely if the seller ishaving a tough time selling, it is an alternative to lowering the home?s price. Opting for a??rent to own? option is financially appealing to buyers as well, but it does have some downfalls.??Most of these downfalls concern the chance of dealing with a seller who isn?t responsible or honest.

If you?re considering a ?rent to own? option, you should do your research first. First?check out your seller?check their credit report. Make sure they?re not in debt or have?let accounts become delinquent. Remember that a ?rent to own? option comes with a?rental period, so pay attention to any signs that the seller may be experiencing financial?troubles. The seller could lose the property in the lease process, and if this happens, youlose the option to buy it as well as the extra rent you?ve paid.

?Rent to own? home ownership is an option that possesses both upsides and caveats. From what we?ve gathered, conducting due diligence is beyond essential.? ?Rent to own? home ownership has the potential to be a great option, notes Marc Holland, who is the Community Outreach Coordinator with Home Star Search, an online rent to own housing?resource. ?However, it should be noted that ?rent to own? housing is not a viable option for everyone. While it?s conducive for some circumstances, it?s sensible for some to consider alternative options. Furthermore, it is essential that the prospective buyer conducts necessary research into the property owner?s position.? Besides encountering an irresponsible seller, there are other considerations. If you?re?thinking about a lease option because of financial reasons, be sure that you will be ableto obtain the mortgage loan required to make the purchase. You can talk to a mortgage?broker to ensure you will be able to qualify for a mortgage loan or consult a financial?planner to be prepared to purchase before entering a ?rent to own? agreement.

Also, be aware that you have to consider the housing market?s future. If it declines, you?will still have to pay your higher contract price. Do the market research before you enter?a lease option agreement. You should obtain a home inspection as well. This can save?you some headache by highlighting problems or potential problems with the home. You?can always decline to buy at the end of the lease option, but you will lose that extra rent?meant for a down payment.

Despite some potential downfalls, the ?rent to own? option has many benefits. The first,?and most obvious, is the financial one. If you don?t have the down payment or income toqualify for a mortgage, the ?rent to own? option allows you to speed up the homeownership?process. Again, be sure that you will have the financial means to buy at the end of your?lease. The benefit to signing a contract now is that you don?t have to worry about rising?home costs.

You also don?t have to worry about saving the money for property taxes, home owners insurance or private mortgage insurance. Those extra expenses are the owner?s?responsibility. The owner usually takes care of the maintenance as well, but you could?opt to do that.??Perhaps the biggest plus is that you get to live in the home before deciding to purchase it.? The owner could also agree to let you make changes and upgrades, but be sure that this?stipulation is in your contract.? At the end of the lease period, if you decide that the home?just doesn?t fit your needs, you have the option of walking away. The only thing you?ll?lose is the extra rent.

The bottom line is that the ?rent to own? option has its downfalls, but it is an excellent wayto speed up the homeownership process. If you trust your seller and can agree on a price?and arrangement, the lease option could be a win-win situation and a faster way to get?you out of someone else?s property and into your own.

Tagged: Buy, Housing, property, Real Estate, Rent

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Source: http://www.geoffbrandrealestate.com.au/benefits-and-drawbacks-of-rent-to-own/

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