How Does Rent to Own Work?
First, it is important for you to know that there are numerous terms used to describe a “Rent to Own” transaction.
The most common are:
- Rent To Own Homes
- Lease To Own Homes
- Lease Option
The Option Agreement states a purchase price the Rent 2 Own Buyer and Seller agree on.
The agreement also details the period of time the Seller is willing to give you to purchase the house. This length of time is called the Option Period and it is usually 12-24 month, but can be longer based on what you negotiate. At this point, it is then the Rent 2 Own Buyer’s responsibility to qualify for a home mortgage to purchase the home before the expiration of the Option Period.
What If I am Unable to Qualify In Time?
If you are unable to qualify to purchase the home during the Option Period, one of two things usually occur:
- The Option to Purchase Contract expires and you will no longer have the legal right to purchase the property. Further, you forfeit any rent credits and the option fee paid to the Seller.
- The Option Agreement will offer you the ability to extend the agreement for a set period of time. If this extension is offered, it typically requires a small fee and/or criteria you must meet.
Option Fee
With a Lease Option/“Rent to Own”, you will be paying what is called an option fee which is generally 3-5% of the negotiated purchase price.
This fee is generally credited towards the purchase price of the home.
Rent Credits
Rent credits are common with a Rent 2 Own home.
It is the portion of rent that’s credited to the purchase price each month that the rent is paid on time. Do not expect to be given a credit if you pay your rent late!
The monthly rent credit amount is another one of those negotiable points between the Rent 2 Own Buyer and the Seller.
Rent to Own Road Map
Using the Rent 2 Own approach is an extremely powerful strategy that anyone can use to buy a home, even with a poor credit score.
Yet many search for their dream home while being completely unprepared. They don’t have the critical road map necessary to safely navigate a successful “Rent 2 Own” home purchase.
Once you are serious about using the Rent 2 Own strategy, merely click on the Rent 2 Own link to unfold your Rent 2 Own Road Map to success.