Do you want to buy a home of your own but do not have enough money to buy it? Don’t worry, we have got you.
People usually opt for a mortgage to buy a house if they cannot pay the amount upfront, but to qualify for a mortgage, you need to have a great score of credit and cash with you for down payment purposes. You might not be able to buy a house without these, the traditional way.
Don’t stress over it. We have got you, as promised. An alternative to buying your own home without a good credit score and sufficient cash is Rent-To-Own Home Agreement. In this agreement, you rent a house for a specified period, with an option to buy it before the lease period expires. It typically consists of two sections: an option to buy and a standard lease agreement.
Keep reading the blog to learn everything about rent-to-own homes, how they work and if it is a wise investment or not.
What does Rent-To-Own Home Mean?
A rent-to-own home is an agreement between the tenant and homeowner to rent the property for a specified period of time, after which the tenant will be given the option to buy the house before the lease period ends.
Through the rent-to-buy properties agreement, the tenants can effectively evaluate the neighbourhood by living there for a while before finally deciding whether to buy it or not. The property owner, on the other hand, can make use of the purchase option to secure a good sale price and also look for tenants.
A classic Rent-to-own properties agreement consists of two parts and that is the purchase option and the rental lease agreement.
The rental lease agreement is just like any other form of the lease agreement in which you pay an agreed amount of rent for a specified period of time while you can live in and use the property. And the conditions are set upon in which it is decided what you can or cannot do to the property.
Whereas the Purchase option gives the tenant a choice to buy the house in between the lease periods or towards the end of it. The price of the property is usually decided at the time of the agreement or closer to the end period, and whether your rent payments will make any contribution towards the purchase. To get this option into the agreement, the tenant has to pay an upfront fee which is not usually much.
How does Rent-To-Own Homes Agreement Work?
Rent-to-own homes, as mentioned earlier, is an agreement to own the home by renting it first. Usually, in arrangements, your monthly rent payments get applied to the final purchase price; in other words, you’re actually making small instalments of your down payments through rental payments.
Although state laws differentiate on rent-to-buy properties agreements, it can be set in any way both the parties, i.e. the owner and the tenant agrees upon. Both parties agree on the purchase price. However, in a rising market, the owner might demand more price than the property’s actual value.
It is hard to find a Rent-to-own home all by yourself, due to which home ownership experts, such as, Stop Renting Perth are in the market. They can provide you with in-depth guidance on how the rent-to-own agreement works and whether you qualify for it or not. They can also help you find the home of your desires and get the agreement in your favour so you can get the ownership of your dream home in half the time!
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