Rent To Own Lease Agreements For Home Ownership

Rent to own lease agreements provide the opportunity of home ownership to people who may not be able to otherwise live the American dream of owning a home. Lack of down payment funds or low credit scores keep many aspiring homeowners from realizing the dream. The good news is that rent to own homes opens the door to homeownership even if the prospective buyer has low credit scores or minimal down payment funds.

Do you want to own real estate? If your answer is yes, there are many advantages with a rent to own contract. The term of the lease may be one or more years. The lease term is negotiable. If you have not saved enough money for your down payment or need more time to improve your credit scores in order to qualify for a loan, the lease term allows you to maintain purchasing rights to the home until you are able to obtain purchase financing.

Your rent to own lease may include an assignment clause. This is a clause that can work to your advantage because it gives you the right to assign your contract to another person if you are not able to complete the purchase at the end of the term. This right is a valuable safety net.

Typically, your rent to own lease will include a rental premium. This means that the amount of monthly rent is higher than normal market rent for the property. When you are ready to apply for your loan and purchase the property, the rental premium is factored into the qualifying equation by your bank and will represent a certain amount of your down payment money required to obtain the purchase loan. The rental premium is a way of helping you save for a down payment.  It is important, however, to discuss your rent to own contract with your bank or lending institution initially in order that you know how your lender may formulate the equation when you are ready to exercise your option to purchase.

Rent to own contracts will generally include what is called an option fee. This is a negotiated lump sum of money paid up front. It is similar to a rental deposit. The specific terms of your rent to own contract should specify how the option fee will be accounted for in the event the purchase option is ultimately exercised or not.  You should remember that each element of your contract is a negotiable item between you and the owner.

Renting vs owning a home? Renting homes is a guarantee of one thing certain: a handful of paid rent receipts. Owning a home is a guarantee of living the American dream. Everyone has to live somewhere; why not build equity in your own home using a reputable rent to own program?