Hi Me Me,
There are many posts about rent-to-own (aka Lease with an Option to Buy) on Trulia, so you may want to search around, see many of the other answers we have on our profile, and visit our frequently asked questions page on our website at www.BuyBaltimoreProperteis.com/faq.
Rent-To-Own can be a wonderful win-win solution for everyone involved! We have done over 400 successful lease-option transactions for third parties, and the majority of our tenant-buyers have purchased the home they were in within 9-18 months.
It's just like any service out there. There are good reputable companies that do rent-to-own, and many that have no idea what they are doing. It seems everyone has their own idea of how it should work. Just make sure you don't pay any fees upfront (unless someone may want to check your credit and provide you with your credit report), and that you don't wire any money (especially via Trans Union or to anyone overseas!).
For our rent-to-own clients, there is a down payment/option fee required upfront, plus first months' rent. The down payment is typically in the 3%-6% of the purchase price of the home, and is not refundable, but counts 100% towards the purchase price.
Therefore, before you ever enter into any contract/lease, you want to talk with a lender or mortgage broker to first make sure you will be able to purchase the home on/before the terms expire (typically 12-36 months). Check the comps (comparable sales) to make sure you are not paying more than market price for the home. Also, have an attorney review the paperwork before signing.
As for rent credits, the seller may or may not be offering them. Generally speaking rent credits in the 10%-20% of the monthly rent make sense. Be cautious of advertisements with huge rent credits, as the price of the house may be more than the comps support and/or the rent may be much higher than market rents. Remember a seller typically needs to have some equity in the home to offer rent credits.
You will want to consider the pros and cons of just renting until you can purchase a home (e.g., will you potentially qualify for a loan in the near future 3-9 months), renting to own (i.e., you need 12 months or more to qualify for a loan), and buying outright (you may be surprised and can purchase sooner than you think). A mortgage broker or lender will be able to tell you how long you will need before you may qualify for a bank loan and how much you will potentially be able to afford (i.e., the monthly amount which relates to how much home you can afford).
We only suggest you rent-to-own if you absolutely want to purchase the home you are considering. Otherwise, you will lose your down payment/option fee.
Again, we have a frequently asked questions page on our website at http://www.BuyBaltimoreProperties.com/faq. Please check that out for more information.