Do you want to have your own home, but you cannot afford it yet? Buying a home is not an easy task. Traditionally, it requires a lifetime of planning before implementing it in real life. External factors such as personal reasons or a new move to Albany can be preventing you from getting the house you want.
One of the options which you can choose is rent to own homes since homeowners don’t have to get mortgage approved. It is a practical option that brings you close to achieving your homeownership dreams.
Housing costs are increasing every year. This has made more individuals inclined towards choosing a rent to own property. Before venturing into this, we have enlisted everything you need to know, in this article.
The procedure of Rent to Own Homes
Rent to own property is usually based on a lease that lasts for one to three years, depending upon the terms decided by the buyer and seller. The basis of it is the option to buy the home being rented out in future.
Some contracts give the tenant a choice between purchasing after leasing. It is a non-fundable payment which is a replication of the final price for the home. In some cases, the amount is used for the tenant to evaluate the down payment.
After this initial option, a part of the monthly rent is used to manage the mortgage. Homeowners can choose to buy the home at the end of the contract if they want to.
Benefits and Drawbacks
There are several reasons why rent to own properties are effective for being close to acquiring a home if there are difficulties getting the mortgage approved.
Read some Advantages:
1. Funds can be saved: Most of us are in a challenging position financial. This makes mortgage approval even tougher. Suppose you cannot even afford the down payment but want to stop renting. Renting a house gives you all the benefits without having to pay a mortgage.
You will only need to cover the initial purchase deposit and monthly payments. Rent to own properties give home buyers time to improve credit, save for down payment and even qualify for a mortgage.
2. Personal experience of the home: It is tough to determine if you want to buy the home in few hours of visiting. Renting to buy allows the potential buyers to live in the house and decide if they’re going to purchase it before making the final decision. Individuals are not obliged to buy the home immediately. Hence, they can explore it at ease.
Here are some disadvantages:
1. Potential fee: The fees are not only charged in case of damage to the home. It is also applicable if mortgage payments are not being cleared on time. The contract can be annulled in case it happens.
2. Responsible for repairs and insurance: Normally, when a home is being rented out, tenants are not responsible for repairs and maintenance. It is not applicable in rent to own properties. Individuals are responsible for fixing things around the house. For some people, it can be an inconvenience since the landlord is responsible for household tasks.
Comparison of Rent to own and Mortgages
These two options should be compared based on short term or long term goals. Real estate agents such as Stop Renting Albany should be consulted when making the decision.
Experts recommend going for a mortgage only if buyers are in a good financial position. Rent to own properties can be a wrong decision as they are an expensive pathway towards buying a home.
The equity gained from buying a home benefits landowners throughout their life. Hence to conclude, purchase a home if you can. Otherwise, rent to own homes is a great alternative.
Frequently Asked Questions:
- Is rent-to-own like a mortgage?
The homes are rented out in rent to buy properties; hence individuals have sufficient time to gather funds. Almost three to four percent of the down payment can be saved, which is a great way to fund a home. To sum it up, rent to own homes are not like a mortgage, but they give you a better opportunity to own a home without paying an enormous of money upfront and every month.
- Do you have to put a down payment on a rent to own?
The main benefit of rent to own home is building equity without qualifying for down payment or having credit. Suppose the value of the home appreciates when the purchase price has been agreed upon. Individuals have immediate equity.
- Does rent-to-own charge interest?
Tenants who are willing to pay for property maintenance are preferred. The rent is mostly above market price. Hence landowners are benefitting either way. There is no need to charge interest on the purchase price of the house.
