When you just want to stop renting but don’t have the resources to buy a house immediately, you have other options. One of the options available is rent to own homes. You have most probably had the idea of renting to own stores, but now this trend applies to houses as well. People can now rent the house to buy it after some years. It is especially beneficial for people who want to stop renting but can’t afford to pay the full price for the house.
If renting to own is something you want to continue with, then you need to know how the process works. Like anything, this option has pros and cons, but understanding it in detail will make a huge difference. Here, we will discuss all the tips and things that first-time homebuyers should know before choosing this option.
What You Need to Know Before Rent to Own Homes
To buy any house, you need to get cleared for a mortgage. If you don’t have a good credit score or are unwilling to pay the deposit, it will be nearly impossible to buy a home. However, don’t worry if you face this issue, as you always have the option of rent to own properties. In this contract, you can immediately move into the house and pay a monthly rent, out of which some parts go into purchasing the house. At the agreed time, the seller will give you an option to buy the house.
More so, with the agreement, the potential buyers pay a deposit fee, in addition to monthly rent. However, this payment is considered to be part of the house’s final purchasing price.
Tips to Choose Rent to Buy Properties
Now that you have a basic idea of what rent to own is, here are a few tips that first-time homebuyers should follow.
Review the Rental Agreement
You come into an agreement with the seller to finalize the purchasing price for the house. Also, the contract clarifies the time you’ll be renting before getting an option for purchasing the property and the percentage of the price that will be credited towards the purpose. The price you pay as a deposit is non-refundable. Many sellers forget to add the maintenance responsibilities in the contract, so make sure to include that so there is no fuss later on.
Don’t Skip your Bills
Once you have accepted the agreement, ensure timely payments. Late or missed payments can cause you to lose the option fee you’ve paid upfront. It can negatively affect the credit score, which won’t help you qualify for the mortgage when it’s time to buy the house.
Pay the Option Fee
The option fee is an important part of the contract. It is a security for both seller and buyer. Now it does involve some risk for the buyer if they don’t want to buy the house; however, it is goodwill with the seller if you are serious about buying the property. More so, it is a down payment for your house anyway, so it’s not going to be wasted.
The process of rent to own homes can be very simple if done through the right professionals like Stop Renting Perth. It is a great way to help you start your new life in your house without having to buy it upfront. You can negotiate the time with the seller and rent the property until then.
If you are interested to know more about the process, move on to our next section.
Frequently Asked Questions
How do you do a successful rent-to-own?
For a successful rent to own process, follow these few simple steps:
- Set monthly rent price with your landlord
- Pay an upfront option fee
- Decide how long the term will last
- Come up with the decision of maintenance role
- You sign the agreement with the seller
What is the difference between rent-to-own and mortgage?
A mortgage is an agreement where the lender and a person taking a loan come into a contract – where the lender has the option to take the property if you fail to make payments and interest. Whereas rent to own is a contract where the potential buyer rents out the house, with an option to buy it after some time.
Why would you want to rent-to-own?
It gives people an opportunity to get out of a rent trap, even when they don’t have the resources to buy the house. It will help you build credit over time to help you clear for a mortgage when it’s time to purchase the property.