Figuring Out the Rent to Own System

Posted by Gurpreet Ghatehora on Tuesday, May 27th, 2014 at 9:28am.

Ever wonder how the rent to own system works? It’s similar to leasing a car in that you make monthly payments and after an agreed upon period of time you may purchase the home. The difference between homes and cars is that the one renting the home takes a portion of the rental amount and puts it toward the down payment for the future purchase of the home.
When should you rent to own?
The rent-to-own system is great for first time buyers who don’t have a down payment or aren’t in a position to put one together. Although you may pay a slightly higher rental rate to compensate for both saving a down payment and paying the current mortgage, the system works. This is also a great option in a tough market where its too expensive to get in on the ground floor, or there isn’t much real estate to choose from.
As a home owner, turning your property into a rent to own deal is an excellent alternative if you are having trouble selling the property outright. In cases where you have already purchased your next home, a rent to own can remove the burden of paying for two mortgages at once. It also works well in a slow market where people aren’t buying as often. In this way, you pay your mortgage and sell the home.
The Final Word
Rent to own properties are all about the contract. As with purchasing a new home, you need a lawyer to draw up documents to close the sale. In this case you’ll want a lawyer to review the rent to own contract to ensure there aren’t any surprises in store for you when it comes time to purchase. Making sure you, as the buyer or seller, if well informed of the contract is the key to a smooth transition when the rent to own period ends.

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