If You Want To Be Rich, We Can Help You! | Understanding Rent to Own Houses!

If you are considering getting into a rent to own home and would like to learn more about how it works then you will want to read this article.  We will be discussing how renting to own works.

When you rent to own, you rent the home for a specific period of time and then have the option to buy the home at the end of the rental period.  In most transactions the eventual purchase price is determined up front.  In some cases, it may be based on the value of an appraisal at a pre-determined time.

Unlike when you get  lease purchase homes, you have the option to buy the home but you are not legally required to do so.  On the other hand, the seller must sell should you choose to exercise your option.  They may not sell the home to anyone else until your option has expired.

In exchange for the option to buy the home, you will be required to pay an upfront option fee.  Typically, this is somewhere between 2% and 5% of the purchase price of the home.  This upfront fee may or may not go towards the purchase price, but in most instances it does.  Should you fail to exercise your option, the option fee in not refundable.

Each month when you make your payment, a portion of the payment will be credited towards the down payment in the form of a rent credit.  The amount of the rent credit will vary according to your contract.

Between the rent credit, option fee and appreciation, very often no additional down payment is required when it comes time to get a home loan.  Of course, mortgage guidelines change all the time so you should always be prepared should you need to make some sort of down payment.

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