Rent-to-own Homes or the Lease Purchase Option

By: Karen B

The current real estate market is lending itself to rent-to-own home sales. Why are many prospective home buyers contemplating this option? There are many reasons behind this home buying trend in today's real estate market. Although, renting your home before buying, doesn't make sense to some buyers, the lease purchase option may prove to be a wise choice for quite a few. To determine if this may work for you, you must first comprehend what it means to begin such an agreement. Here is a summary of why you might want to look into rent-to-own home buying.

Build Up Your Credit Rating

One of the cases for you may prefer a rent-to-own property is in order to build up credit scores before attempting to become a homeowner. You should always improve your credit rating before applying for a home mortgage loan. Lending companies look closely at credit ratings. Your actual rent payment is building your credit score. You can also work at the same time in reducing your other debts, such as credit card debt, car loans and student loans.

What is Involved in Lease Purchase Agreements?

Renting before you buy will give you an idea of what goes with living in this particular house. This can be a invaluable time evaluating your role as a homeowner and getting to know the property. You'll have the opportunity to care for the home on a daily basis and what kind of repairs may be necessary. As you enter into a rent-to-own agreement (often referred to as a lease purchase option), you agree to move into the home. Expect the standard move-in expenses such as a security deposit. A rent-to-own option means that you have the right to purchase your home at a certain date for a previously agreed upon price. Most purchase-option homes also require an extra deposit (sort of a down payment) that is due at signing, which means that the owner can't sell the house during the term of the lease. You can think of this cost as a bit like a rental deposit. In most cases, an additional monthly payment can be made that is applied towards the purchase price of the home.

The Responsibilities of Being a Lease Purchase Home Buyer

Make certain that you are completely cognizant of all the conditions and terms of this agreement. In the lease purchase agreement, you are compelled to purchase, there isn't an option. You must pay your rent in a timely manner, or you may lose the right to purchase the home, plus lose the extra money that you have already paid during the lease. Many find that at the end of the lease, they have the home they may not have been able to buy in the traditional manner. At the end of the contract may decide that this home doesn't meet your expectations. Either way, rent-to-own can be a good opportunity.

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