Do you remember when you purchased your first house all when you paid the first EMI towards your home? Earlier it was difficult to buy a house but nowadays with many options like a rent-to-own agreement between sellers and buyers; it has become easier.
In this article, we will discuss the rent-to-own concept in detail.
What Is Rent to Own?
Rent-to-own agreements are kind of an alternative to the traditional home loans provided by different banks in different countries. These are the agreements made between the buyers and the sellers which means the landlords and the tenants. In these kinds of agreements or contracts, it is exclusively mentioned that the tenants we’ll buy the rental property at some point of time in their life. The best deal about such contracts is that the buyer can step out of it if the house starts to lose its value in the future. Rent-to-own contracts allow the buyers to buy mortgages over the rental property from any bank once they think of buying the house after a few years of renting the same property. The amount that we pay upfront which is called the down payment and the monthly rent will be Considered towards the price that has to be paid while buying the same property at add specified time in life.
How Does It Work?
Rent-to-own works perfectly for young generation couples and students who do not have the entire prize money to purchase a house but are committed to buying the house of their dreams in the future. While signing such contracts or agreements, it is mentioned that the buyers will buy the house after a certain time. So the contract is made mentioning a particular price for the house but has to be paid later in the future by the buyers which are mutually agreeable by the sellers. This is the only amount that you have to pay while buying even if, in the future, the price of the house rises as its market value increases. The down payment or the payment made upfront is nonrefundable.
Pros Of Rent To Own
- One can apply for rent to own properties even if they have less or bad credit.
- This is a great deal for the buyers who are young and committed.
- It is always great to live in a property as paying guest which you are going to buy in the future in order to get a firsthand experience.
- There is a locking price agreed by the buyer and the seller at the time of applying for rent to own.
Cons Of Rent To Own
- There is always a high risk of late payments.
- sometimes the price of the property would increase in the future but as the locking price is already agreed the sellers will not get the high price for the house.
- The buyers can move out of the deal if they cannot afford it.
Conclusion
The average prices of the properties may vary from market to market in every different country. So, the price listed at the time of applying on the contract has to be calculator based on the current value of the house when you’re planning to buy or sell the rent to own property. In the end, it is always a sense of relief when we know that we can buy a nice and affordable house in a great location to raise a family while being surrounded by great neighborhoods and nature. hence rent to own is a great way of adding on equity in life with the sensor possibility of having a House of our dreams.