Good Morning Deborah,
A rent to own, or lease to own home works like this. Once we identify a property we negotiate the terms and conditions of the sale as follows.
Sales price at the end of the option period.
Money down on the option - sometimes between 3% and 10%.
Portion of monthly rent applied toward principal balance at time of sale.
Length of the lease option - 12 month, 24 month, etc...
At the end of the lease period you have the option to purchase the home at the agreed to price, your option money becomes the down payment, and a portion of your monthly rent is also applied toward your principal or other costs.
I do stress extreme caution and research on such properties in our present market place. I was recently researching such properties for a buyer and found over 50% of these properties were in foreclosure. Keep in mind all the money you have put down, and the portion of your rent money is all given away if you don't purchase the home at the end of the lease option period also. Now imagine the owner isn't paying his mortgage and collecting your money every month and the bank shows up and says - Hi we own this home now !!!
This is a worst case scenario - but it has happened so use caution.
Licensed Real Estate Broker Associate
Florida Future Realty Inc.
2816 Del Prado Blvd South Unit 2
Cape Coral FL 33904