Rent to Own 101
For most of us, buying a house requires a mortgage. To qualify for a mortgage, potential buyers need to have an approved credit score and a good chunk of change for down payment. Without these, buying a home might not be possible. However, we offer an alternative—rent to own.
Rent to own is a way of getting you into the house of your dreams while working on a down payment and improving your credit score.
So how does it work? What terms should you be aware of?
Option Fee
In the agreement, the potential buyer (you) is required to pay the seller a one-time fee, the option fee. This fee is non-refundable and it gives you the option to purchase the house in the future. Some contracts give you the right to purchase the house, …show more content…
It can be determined when the contract is signed at the beginning or the lease or when the lease expires.
Locking in the purchase price is more desirable, especially if the market prices are on the rise.
Rent
Once the lease contract has been drawn up, there will be a specified amount of rent for each month. The lease term is negotiable but it’s usually between 1 and 3 years.
Typically, a percentage of each month’s rent is applied to the purchase price. Rent is often charged by the seller at a slightly higher rate than the standard rent price in order to accommodate the rent credit you receive to assist you in the rent to own process.
Maintenance
Depending on the terms of the contract, you could be responsible for maintaining the property and this can include HOA fees, taxes and insurance. The seller is ultimately responsible for HOA fees, insurance and taxes therefore the seller can determine whether or not he or she wants to cover these costs.
Regardless, you still need to purchase renter’s insurance to cover losses to personal property and provide liability coverage if someone is injured while on the
For most of us, buying a house requires a mortgage. To qualify for a mortgage, potential buyers need to have an approved credit score and a good chunk of change for down payment. Without these, buying a home might not be possible. However, we offer an alternative—rent to own.
Rent to own is a way of getting you into the house of your dreams while working on a down payment and improving your credit score.
So how does it work? What terms should you be aware of?
Option Fee
In the agreement, the potential buyer (you) is required to pay the seller a one-time fee, the option fee. This fee is non-refundable and it gives you the option to purchase the house in the future. Some contracts give you the right to purchase the house, …show more content…
It can be determined when the contract is signed at the beginning or the lease or when the lease expires.
Locking in the purchase price is more desirable, especially if the market prices are on the rise.
Rent
Once the lease contract has been drawn up, there will be a specified amount of rent for each month. The lease term is negotiable but it’s usually between 1 and 3 years.
Typically, a percentage of each month’s rent is applied to the purchase price. Rent is often charged by the seller at a slightly higher rate than the standard rent price in order to accommodate the rent credit you receive to assist you in the rent to own process.
Maintenance
Depending on the terms of the contract, you could be responsible for maintaining the property and this can include HOA fees, taxes and insurance. The seller is ultimately responsible for HOA fees, insurance and taxes therefore the seller can determine whether or not he or she wants to cover these costs.
Regardless, you still need to purchase renter’s insurance to cover losses to personal property and provide liability coverage if someone is injured while on the