Understanding Rentals

The Points To Remember When Choosing Rent To Own Homes

So you have finally got to a point that you are fed up in renting. Well the thing is, you don’t have the documents asked from you or your finances fail to meet the requirements to get a mortgage. If you would consider the rent to own option, this will not be much of a problem anymore. However, there are things that you must be mindful about before proceeding with this option.

Basically, rent to own is just like renting a house. But here, the lease also comes with the choice to buy it. 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. Most of the time, this is around 1 to 7 percent of agreed purchase price of the property. On top of the rent, you will need to pay as well the Rent Credit or Rent Premium. This amount is on top of the rental fee which will go directly to the purchase price of the property.

For instance, you have to pay $1500 dollars for a house that features 2 bathrooms and 3 bedrooms. In relation to the added amount that must be paid for the purchase price of the house, this is something that you and the owner has to talk to. In most cases, you will be paying 20 to 50 percent of the above market rent but let’s go with 25 percent as the median for the sake of this article.

In the event that you are going to pay 1,500 dollars a month for the rent, 25 percent of that is 375 dollars that goes automatically to the purchase price. If the lease is set to 36 months, then you will have to pay a rent credit worth of 13,500 dollars and that is how rent to own works.

But as soon as you have taken the path of rent to own property, do the best that you can in completing the lease term. This is because of the fact that if in the middle of the lease you come to a decision to not continue with the term or can’t pay for the rent monthly, the owner will forfeit everything you have paid including the option fee and the rent premium. The seller will keep it all and you have to move out and start things all over again.

You’d probably be surprised on the number of times that this thing happens. Plan things thoroughly before proceeding to rent to own option.

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