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Rent to Own
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Some potential homeowners who are not able to purchase a home right away
consider rent to own options instead. A rent to own option, often referred
to as a lease, is essentially a rental contract for the rental of a property
which includes the stipulation that the renter will be given the option of
purchasing the property at the conclusion of the lease. This type of rental
agreement may not be worthwhile for all renters but there are some who will
find this type of agreement to suit their needs quite well. In particular
renters with bad credit who might be unable to buy a home otherwise and
renters who aren’t quite sure they really want to buy a home. It can also
be a worthwhile agreement for homeowners who are planning to sell their
home buy may not want to sell it immediately.
When Your Credit is Bad
Potential homeowners with bad credit may find a rent to own situation
may be just what they are looking for to help them purchase their dream
home. There are a variety of financing options currently available and
it is likely even homeowners with poor credit can find a financing option
but it is not likely this option will be favorable. Homeowners with poor
credit are often shackled with unfavorable loan terms such as higher
interest rates, requirements to pay points and adjustable rate mortgages
instead of fixed rate mortgages. In these situations, it might be
worthwhile for the renter to repair his credit before attempting to
purchase a home.
One of the best ways to repair credit is to maintain good credit in
the present and into the future. Most blemishes on credit reports are
erased after a certain period of time. Renters who have poor credit
can work on repaying their current debts in a timely fashion and with
time their credit score will improve. During this time participating
in a rent to own program allows the renter additional time to repair
his credit and may also allow the renter to accumulate financial
resources which will enable him to purchase the home when the lease
period is over.
When You Just Aren’t Ready to Buy a Home
Some renters opt for a rent to own program when they aren’t quite
sure they really want to own a home. In these types of agreements,
renters are given the option of purchasing the home at the end of
the agreement period but they are not obligated to purchase this
home. This allows the renter to see what it is like to own a home
without having to commit to homeownership.
Renters who are renting a home may learn a great deal about home
ownership during the rental period. This may include information
about maintaining the landscaping of the property and dealing with
conflicts with neighbors. It may also entail caring for and
maintaining a significantly larger domicile than most apartment
renters have to maintain. Some renters are not quite sure they
are ready to handle all of these issues and may use a rent to own
agreement as a trial period to determine whether or not
home ownership suits them.
When the Homeowner Just Isn’t Ready to Sell
Some homeowners offer a rent to own option when they plan to sell
their home but do not want to do so immediately. Some homeowners
may be hoping for property values to rise before they sell their
home so they can either regain the amount they have invested in
the house or profit from the purchase price of the home. These
homeowners might choose to rent out their home during this time
and offer the renter the option of purchasing the house after a
set time period. This enables the seller to earn an income from
rent while they are no longer living in the home. The rent they
charge to the renter is often enough to cover the mortgage and
yield a profit making it a financially wise decision for the seller.
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