Owning a home is a goal that many renters aspire to. On the surface, this sounds like a great deal. But with any financial decision, there are pros and cons to consider. Here we'll discuss the basics of the rent to own homes option to determine if it's the right fit for your situation.
There are two separate contracts to sign: 1. Rental agreement 2. A lease option to purchase
It's not uncommon for tenants to pay 15-20% more in rent as well. But remember that this “extra” amount will be credited toward the home's future down payment.
Pros for buyers: The rent to own homes option is excellent for those that are having difficulty obtaining a mortgage the traditional way.
Pros for sellers: The rent to own homes option is also beneficial to sellers too. How? For starters, they're able to obtain a tenant that has a long-term goal of purchasing their home.
Cons for buyers: The buyer runs the risk of losing both the money that goes towards the purchase price plus the option to buy if the seller loses the home due to poor finances.
Cons for sellers: If the seller receives an offer for the home during the lease period, then they'd have to refuse it as the tenant's lease option gives them the first dibs to purchasing the home.