What is Rent to Own?
Rent to own is written contractual agreement between you and the Seller of a property that allows you to purchase the property at an agreed to price at a future date. This is usually between 1 and 3 years. You pay a modest down payment, usually dependent on the price of the property, move in right away, but don’t have to qualify for the mortgage until the end of the agreed upon term. You pay rent to the Seller until such a time as you can buy him/her out and complete the purchase.
Benefits of Rent to Own vs. Waiting till I can Qualify?
The benefits for you as a Buyer are varied but often we see renters who are trapped in the rental cycle. This can allow you to secure the property you want today, without the unknown of future price increases in the market, while still giving you time to get your purchasing ducks in a row.
Why would a Seller Rent to Own to me instead of Selling outright?
In a “hot” market, a Seller’s market, finding Rent to Own opportunities is difficult and it is likely you are overpaying if you are entering into a Rent to Own agreement, but when the market is slow, when we’re in a Buyer’s market, there are fewer buyers out there. This can make life difficult for someone who has to sell, and expensive if a house is sitting vacant. Rent to Own can allow a Seller to move forward with their lives, without the financial burden that can come with a property that hasn’t sold. This creates a win-win scenario.
Can the Seller change his/her mind or price?
Not while you are under contract. Once the agreement is agreed to and signed both parties are obligated to complete, following through with their commitments.
What if I can’t qualify for a mortgage when the term is up?
In theory an option to extend for an additional term can be requested and imbedded into the contract at the time of negotiations, however if you are not confident you will be able to complete at the end of the term then this buying option may not be right for you. We would recommend you have a conversation with a mortgage broker before entering into a Rent to Own agreement to ensure you have a proper and attainable plan from the beginning.
How do I find Rent to Own properties?
Submit the form below if you would like more information about Rent to Own or to be informed as such properties hit the market.