Rent-to-own homes also called an "OPTION TO PURCHASE" provides buyers-tenants and sellers-landlords additional options during questionable times for the market or the individual parties. The general agreement allows for a potential buyer who may not have the capital to buy the house out-right or the credit to get a loan, to pay a deposit up-front, traditional rent, and a rent premium to live in the desired home immediately. The deposit on a rent-to-own is usually three to five percent of the property price. The traditional rent goes straight to the seller-landlord, as in any other rental agreement. The rent premium acts as a further deposit toward the purchase of the house. Most rent-to-own contracts are fairly short term two to three years is the usual length – and the price of the property is usually established at the contract signing. The buyers-tenants must get approved for a traditional home loan within the time frame from the start of the agreement, or buy the home outright with cash. For security and planning, both parties establish a property sale price at the beginning of the agreement – or decide to go with the market price at the time of the purchase – and write the sale price into the contract.
Benefits For Buyers-Tenants
Benefits For Sellers-Landlords
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There's a lot of conflicting advice about whether it's smarter to rent or buy. Some say renting is like throwing money down the drain when you could be building equity in your own home. Others argue there are better ways to invest your cash, and you're giving up valuable flexibility. "We typically make big decisions like whether to rent or buy with emotion and defend them with logic, which is why it's so easy to make a case for either, but there are actually several considerations that can make the decision to rent or buy much easier.