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Important Things To Know About Rent To Own Homes

So, you have reach your boiling point and don’t want to rent anymore. The thing is, you can’t provide the necessary documents or perhaps, your finances don’t meet the requirements for a mortgage. Don’t worry because now, you have the chance to get a house with a rent to own option. However, there are things that you must be mindful about before proceeding with this option.

So rent to own works like a typical rental property. You will rent a house but rather than just renting it, it has the option of buying it at the same time. The lease option would fall on the seller’s term but most of the time, this lasts for 3 years more or less and you are expected as well to put an option fee or upfront down payment. This is normally 1 to 7 percent of the purchase price you and the seller has agreed for the house. In addition to the rent, you are also going to pay for the Rent Credit or Rent Premium. This additional amount is what put towards the final purchase price of the property.

So say that the average price for a 2 bath and 3 bedroom house is approximately 1,500 dollars. The added amount that you should pay for this is now something that you have to discuss with the owner. Generally speaking, you will have to pay 20 to 50 percent above the rental price of the market but for this article, let’s stick to median of 25 percent.

Assuming that you are about to pay 1500 dollars per month on the rent, there will be an additional 375 dollars for the purchase price. If your lease is set to 36 months, you will be paying an accumulated rent credit of $13500, which is how each rent to own structure works.

You on the other hand also need to know that if you opt for rent to own, make sure that you have committed yourself and do whatever it takes to finish eh 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 keeps all and you don’t have any other choice but to move out.

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.