Rent to Own – Is This a Viable Option for You and Your Family?
Currently, the economy is experiencing a vast array of complications. While the housing market prices are at an all-time low, full-time employment and savings are also at an all-time low. As a result, many individuals who desire to purchase a home are simply unable to engage in the process; that is, unless they opt for a rent to own agreement. These specially-designed agreements allow tenants to purchase the property that they sublet – at some point in the future – as part of their lease agreement. In most instances, a time frame is specified that outlines when the option to purchase becomes open. It could be after a year lease, a two-year lease, or even a three-year lease – that period is pre-determined by the property owner. Rent to own is a positive and productive option for those that have a desire to own a home, yet do not have the capability of qualifying for a mortgage, have less-than-favorable credit, or are unsure as to whether or not they are ready to making such a hefty commitment. In this guide, we will outline those who would benefit immensely from engaging in rent to own.
Purchasing a Home is a Major Commitment
If you are reading this, you know and understand that purchasing a home is a major commitment. In fact, it is considered to be one of the largest financial-based commitments of a lifetime. If you appreciate the value of this commitment, rent to own may be an appropriate choice for you. In most instances, there are two types of options associated with rent to own agreements – “option” and “obligation”. If you want to have a chance to truly experience the home, the neighborhood, and the general area where the home is located prior to committing to a purchase, you will want to only sign rent to own agreements that outline the fact that the choice is an “option” or “optional”. This will allow you your lease period to make a decision as to whether or not you are ready to commit, 100%, to the purchase of that particular home.
Unavailable Funds for a Down Payment
If you are attempting to determine if a rent to own home is the rent type of home for you and your family, you should first consider whether or not you have the available funds for a down payment. When you sign up for a rent to own agreement, you may qualify for rent credits and the investment of optional money. If so, the monies received through these will aid in accumulating the money necessary for a down payment when the lease expires.
Low Credit Score
If you have a low credit score, it is unlikely that you will qualify for a traditional mortgage; however, if you opt for a rent to own home, you will accumulate credit – which makes it easier to obtain financing for the home once the lease on the property expires. Rebuilding finances is a cycle that starts with and ends with credit. Prior to the recession, credit was an easy financial crutch. Unfortunately, in the year 2009 – and all of the years since the recession – credit has no longer been a crutch. For many, it has been a necessity. As a result, the average household has $15,000 to $20,000 worth of debt. When companies starting laying off, shutting down, and eliminating full-time positions, many households faced dire situations where they had to use credit to handle even the smallest of expenses. If you are one of the many households whose credit score has diminished, a rent to own is a viable option for you and your family.
By choosing a rent to own home, you have many advantages. First, you gain instant access to the home in which you have an interest. If you opt for an agreement that has the option – not the obligation – to buy at the end of your lease, you will have time to determine if you truly like the home and the area where it is located. During the lease period, you may then work to lengthen your employment history, improve your credit, increase the amount of money that you have in savings, and build up the money needed as a down payment for the home. Together, all of this will make you a stronger candidate for the financing that you will need to successfully pay off the home.