The Points To Remember When Choosing Rent To Own Homes
So, you have reach your boiling point and don’t want to rent anymore. What seems to be the problem is that, your financial records fail to meet the requirements to get a mortgage approval or you are lacking of necessary documents. Well now, this would not be a problem for you as you got the chance of having a house through rent to own option. But just before you proceed to this, there are secrets that you should learn about.
Basically, rent to own is just like renting a house. You will rent a house but rather than just renting it, it has the option of buying it at the same time. You’ll have a lease that last for around 2 or 3 years and the seller is expecting you as well to put some form of an upfront down payment or an option fee. In most instances, this is going to be 1 to 7 percent of the property’s agreed purchase price. On top of the rent, you will need to pay as well the Rent Credit or Rent Premium. This additional amount is what put towards the final purchase price of the property.
For instance, you have to pay $1500 dollars for a house that features 2 bathrooms and 3 bedrooms. The added amount that you should pay for this is now something that you have to discuss with the owner. In general, you may expect to pay roughly 20 to 50 percent above market rent but for sake of the argument in this article, let’s stick to 25 percent.
Now back to the drawing board, the rental fee for the house is 1500 dollars, get the 25 percent of that and that is what you have to pay for the purchase price. If for example that the lease is set to 3 years, then you are going to pay the rent credit amassing 13500 dollars and that’s how rent to own works.
On the other hand, you need to know at the same time that if you chose to go for rent to own, you have to commit yourself in finishing the lease term. Because if for example that you are unwilling or unable to buy the house prior to the end of your lease agreement with the owner, you will forfeit all the money you’ve paid including the rent premium as well as the option fee. The seller will keep it all and you have to move out and start things all over again.
As a matter of fact, there have been several cases to which this happens before. To avoid these things happening to you, plan how you will proceed with rent to own option.
Partner post: index