Important Things To Know About Rent To Own Homes
So, you have reach your boiling point and don’t want to rent anymore. Well the thing is, you don’t have the documents asked from you or your finances fail to meet the requirements to get a mortgage. If you would consider the rent to own option, this will not be much of a problem anymore. But just before you proceed to this, there are secrets that you should learn about.
Rent to own options are most likely how other rental properties work. You are renting a house but, it comes with the option of buying it. You will be given a lease term that last for 2 or 3 years depending on the seller and you are expected to put a form of upfront down payment or an option fee. This is normally 1 to 7 percent of the purchase price you and the seller has agreed for the house. Aside from the rent, you’ll be paying what’s called Rent Credit or Rent Premium. This additional amount is what put towards the final purchase price of the property.
For instance, you have to pay $1500 dollars for a house that features 2 bathrooms and 3 bedrooms. In relation to the added amount that must be paid for the purchase price of the house, this is something that you and the owner has to talk to. In most cases, you will be paying 20 to 50 percent of the above market rent but let’s go with 25 percent as the median for the sake of this article.
In the event that you are going to pay 1,500 dollars a month for the rent, 25 percent of that is 375 dollars that goes automatically to the purchase price. If the lease is set to 36 months, then you will have to pay a rent credit worth of 13,500 dollars and that is how rent to own 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.
You’d probably be surprised on the number of times that this thing happens. To avoid these things happening to you, plan how you will proceed with rent to own option.