Is a Rent to Own House as Ideal as It Sounds?

Is a Rent to Own House as Ideal as It Sounds?

Who doesn’t want to have his or her own house? Nobody. Unfortunately, it’s not exactly a breeze to purchase a home, especially if you are a first-time buyer. There is the challenge of getting approved for a mortgage. In some cases, the buyers have a really good credit score but they don’t have enough for a down payment.
On the other side of the picture, landlords are always looking for good tenants for their units. Some say that a rent-to-own is the best option for both homeowners and tenants.
So how does it work?
The landlord rents out his home or condo under a basic home lease. The tenant is then given the option (for an extra payment) to eventually buy the home later on for an agreed upon price. Usually, the fee for this option is 2% or 2.5% of the final price of the house. The tenant will pay an extra fee on a monthly basis. If at the end of the lease term the tenant decides to exercise his right to buy, the accumulated account from the monthly extra fee could be used as the down payment and they’ll just apply for a mortgage for the rest of the price of the house.
But is it really all that easy and ideal? To help you decide whether a rent to own is for you, here are some pros and cons that you need to consider:
PROS
• If you don’t have the down payment now, it’s not an issue because you’ll have it at the end of your lease contract (from your additional payments)
• Even if your credit is currently not good, you can still improve it when you pay your rent on time
• You get to experience living in the neighbourhood and decide at the end of the lease whether you want to live there permanently or look for another
CONS
• The homeowner may agree to sell you the house but that is no guarantee that the bank will agree to finance your purchase when you exercise your option to buy.
• Most of the time, if you do not purchase at the end of the lease, the option payment is forfeited
If you are considering a rent to own, it is important that you know everything there is to know about this kind of purchase. It will be a great help if you consult with a seasoned realtor like Tammy Samuels who can help you understand what buying a rent to own really entails.