Advantages for the buyer/lessee:
â€¢ Term of Lease. Rent-to-Own buyers and sellers enter into a lease agreement with the home you have chosen for a fixed period of 15 months to five years. At the conclusion of the lease, the buyer will have the exclusive option to purchase the home from the seller.
â€¢ Purchase Price. The method to determine the future purchase price will be determined before the Rent-to-Own lease agreement is finalized and signed by both buyer and seller. This method is fixed and will not change after agreed upon by both parties.
â€¢ Down Payment. Rent-to-Own buyers are generally required to pay a non-refundable down payment to the seller. This down payment is known as Option Consideration. Down payments are typically 1% to 10% of the agreed upon purchase price. This down payment will later be credited towards the purchase price of the home upon the completion of the Rent-to-Own lease term.
â€¢ Rent Credit. In addition to the down payment credit, the Seller may offer monthly rent credits. A â€œrent creditâ€ is a portion of the monthly lease payment that is applied to the overall purchase price if and when the Rent-to-Own purchase is executed at the end of the lease term. The amount of the rent credit and the down payment will vary amongst various sellers and properties.
â€¢ Rent-to-Own Assistance. Sellers may ask the Buyer to seek assistance to help the Rent-to-Own buyers work to complete a successful purchase at the end of the lease term. The buyer agrees to participate in a credit repair program which will monitor a buyerâ€™s credit throughout the term of the lease.
â€¢ Opportunity to Own Your Dream Home. Many people find their dream home but need time to make their purchase. The Rent-to-Own purchase not only allows you to have that time, but also allows you to live in your home before you decide on exercising the option to purchase.
â€¢ Make Your Rent an Investment. Both a portion of your monthly rent and your entire down payment at closing will be credited to your purchase price at the time of sale.
â€¢ Potential to Own Without Great Credit. Whether youâ€™ve had late payments, a bankruptcy or simply havenâ€™t had enough time to build up your credit, a Rent-to-Own home may enable you to build equity and repair credit while renting to own your home.
â€¢ Maintain Your Flexibility. Rent-to-Own enables you to build your equity in a home, but also gives you the flexibility to walk away from the property at the end of your lease term, should you decide you donâ€™t want to make the purchase.
â€¢ Upfront Timing. The timing for moving into a Rent-to-Own home can be much shorter than purchasing a home, as much of the paperwork takes place at the end of your lease when and if you exercise your option to purchase and are approved for a mortgage.
â€¢ Credit Improvement Specialists Available. Loan officers are available to provide credit repair advice and assistance, and there is no cost to you for this service, depending on the lender. So it is important for you to speak with a lender who is knowledgeable in Rent-to-Own transactions prior to beginning your home search.
â€¢ Preparation for Home Ownership. The Rent-to-Own process affords you, as the buyer, the opportunity to prepare for what is necessary when owning your own home. Typically, you will be responsible for the daily maintenance and upkeep of the home and yard and all utilities, depending on the terms of the Rent-to-Own agreement.
â€¢ Privacy. The renter is not the owner on the deed in public county records.
Please post additional questions here on Trulia.
Same term no difference.
RECOMMENDATION: Never enter into a lease own property unless you have a Realtor who represents you so many of these agreements end up in huge mess when tenant has one idea and seller another.
National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
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We have put on a new roof, new windows, new wallboard and paint inside and out, had the a/c serviced, We should be be laying the new laminate floors next week. It should be ready to move into in early August.
We have not listed it on MLS yet, because we are still working on it, but we are getting closer.
Second, yes I do, but I think it's better for you to simply make an offer with a lease-option--rather than restrictng yourself to foraging a list of specific owners for their properties.
Third, I need to make a minor correction. An option fee is not a down-payment. Although it often gets applied towards the balance of a purchase (like a down-payment), the option fee is technically only consideration for the option itself. Having said that, various sellers structure their lease-options differently (so forget all of the percentages). A lease-option consists of the following: 1) an option (which has an associated fee), 2) a lease agreement (which has an associated first and last month's rent, security deposit, and the rent), 3) a down-payment (there's lots of variation on how this is collected; it's often split up into monthly payments that are collected in addition to the rent), and 4) the purchase (assuming the tenant/buyer opts to exercise the option).
Another 'seller' might be someone who is relocated out of the area because of their job. As they're not sure of their situation, or don't like the current property values, they may be wanting to do a rent to own.
These situations come up randomly and are not something you find on one website. Drive neighborhoods, put up your own advertising, ...just be careful not to rent from someone just to find out they were upside down in the mortgage, hadn't been paying their lender and your home is foreclosed on 6 months down the road.
You are one of many looking for this option. and we're sorry to say in this arena the demand exceeds the supply.
But your best bet it to work with multip[le agents to identify these opportunities since mose are not advertised as such. The agent on the otherhand may have an understanding of the seller's level of motivation and what they are willing to do.
The Eckelr team