What is rent-to-own?
Rent-to-own houses allow buyers to invest in their homes by paying a set amount each month to live in the house. At the end of an agreed leasing period, the buyers have the option to purchase the home.
Is rent-to-own a new concept?
No. Rent-to-own has actually been around for more than sixty years, but it is becoming more and more popular. Since it is more difficult now to go through the loops of obtaining a loan and purchasing a home right away, rent-to-own is a good second option.
Who chooses rent-to-own?
Potential buyers included:
- People who want to improve their financial report over the lease period
- Renters who want to test a home, area or school district before committing to purchase and stay long-term
- Renters who are trying to look toward home ownership instead of continuing to rent
How is rent-to-own different from renting?
When you rent-to-own, your deposit will go toward your down payment at the end of your agreed period if you decide to purchase the home. Also, a portion of your rent will be credited back to you at the time of the purchase. If instead you choose not to purchase the home at the end of the period, you will not be credited back any money.
What are the benefits of rent-to-own?
- You can have the priority of purchasing your dream home before any other party while building or fixing and financial dilemmas that could potentially hold you back from purchasing it
- You have no obligation of purchasing the home, so you can walk away from the house at the end of the lease term without feeling pressured to buy it
- You can learn the responsibilities of taking care of a home
- Your money won't go to waste because a portion of your down payment and monthly rent will be credited to the purchase at the end of the period
- The rent-to-own agreement freezes the price of the property so it will not rise or fall during the lease period which could potentially help with equity gains
Do I have to buy the house at the end of the lease period?
No. At the end of the lease period, you have the option to walk away or purchase the property.
Will my down payment and monthly rent be credited back to me if I decide not to purchase the property at the end of the lease period?
No. Unfortunately the down payment and monthly rent is nonrefundable.
Who pays the home insurance and real estate tax during the lease period?
The seller maintains full insurance and pays the property taxes, HOA dues and other necessary fees.
What is an option fee?
An option fee is not the same as a security deposit. The option fee is paid at the beginning of the lease period and is what allows the renter to have an exclusive right at the end of the period to decide whether or not they want to purchase the property.
Do rent-to-own homes allow me to bring my pets?
Most properties will allow you to have pets, but is specified in the agreements. Sometimes sellers will ask for "pet rent" to be added to the monthly rent. "Pet rent" can vary from $5-20 per month.