Rent To Own is a better deal for the Seller than it would ever be for a potential Buyer.
The basic concept is finding a way to "force" savings towards a down payment by including a portion of the monthly rental that goes towards that savings. You pay your rent every month and your Landlord deducts a pre-determined amount to hold in a special bank account, called an "escrow" account. Your Landlord holds that money until you have saved up enough---through this "forced-savings" method---to meet a down payment to purchase the home.
The terms of the purchase price, including the down payment amount, and the amount to be set aside from the rental for down payment, are all set down at the time of lease signing.
It's all about helping the renter/tenant save up enough money for a down payment to buy a home (in this case, the one you're renting). But this is a better deal for the Seller because he gets to lock in a purchase price and a buyer today for a future sale.
Saving money for a down payment? Well, heck, you can do that on your own.
If you are dedicated to the idea of buying your own home, you can create your own savings plan to save up enough money for a down payment. And when you have saved up enough for a down payment, if that takes a year or two or more, YOU get to decide on the price you're willing to pay for the house at that time based on current market conditions. You won't be locked in to a price that may be a lot higher than what the house is worth in the future.
With Rent To Own you'll be locked in both to the house and to the price, even if it takes you 3 years to save enough through the forced savings of the rent payments. What happens if three years from now your life situation has changed? Maybe you need a bigger/smaller home. Maybe your employment has relocated. Maybe your credit or income is insufficient to qualify for a mortgage loan.
Find a way to save up on your own; not with Rent To Own.
Sit down with a local Mortgage Banker and get yourself prequalified, too. You may find you're better qualified than you think you are, and, if you're not, at least you'll know how much loan your income and credit qualify you for, and how much you have to save towards down payment and closing costs.
PowerHouse Solutions, Inc.
1010 Northern Blvd. Suite 234
Great Neck NY 11021
Licensed Mortgage Banker â€“ NYS Dept. of Financial Services
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I would recommend you have a meeting with your mortgage broker or a realtor to discuss the different options available in this market. Rent to own properties are a hassle at times, (and are rare) you may very well save more money opting to buy if you can qualify. Feel free to contact me for further information, I would love to help!
In regards to renting vs purchasing, I recommend you sit down with a Real Estate agent as well as a loan specialist to go over your options in terms of monthly payments, downpayment, type of loans, etc...
It pays to be mentally as well as financially prepared to enter into a complex deal.
In addition thereto, beware of rent to own/purchase options. You should always consult with an attorney before signing confusing, legal, and complex documents such as a Rent to Own agreement. Finally, also beware to verify home-ownership if you are going to use a source such as craigslist, which I completely do not recommend.
I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.
Wishing you the best of luck,
De Vonte Williamson
Licensed Real Estate Salesperson
Proudly Serving Long Island
Coldwell Banker Residential
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Starting at $1,370/mo to $2,900. Two or three Bedrooms.
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