When shopping for a home, especially for the first time, many people do not realize the multitude of options available to them. One of which is the concept of ‘rent to own’. Rent to Own is a home buying process that is exactly what it sounds like, you begin by paying rent on your home until you are able to purchase. This benefit allows home buyers the chance to save money while living in the house. When making the transition from renting an apartment to buying a house having enough money to do so can take some time. Feeling like you are wasting your money in rent for an apartment versus paying a cheaper mortgage can be frustrating. With rent to own, you get the positives of both! You can live in the home of your dreams while paying the rent you can afford until an agreed upon time to own your home.
So how does it work?
Similar to traditional renting, there is a property management team in place. Their job is to help keep you on track towards that end goal of owning your very own home. You will sit down with them to determine your monthly rent and the time it will take to reach the end goal. A portion of that monthly rent will go towards your purchase price or the closing costs. The main thing to keep in mind is that when you rent to own you are agreeing to rent the property for a specific amount of time, then purchasing the home. Now of course, there are just rental options, but if you intend to buy the home that will be made clear and put into the contract prior to your John Hancock.
Thinking back to those days of landlords, when it comes to repairs and maintenance with a rent to own situation, this can vary. Since you intend to purchase the home it only makes sense that the responsibility should fall on you, the tenant/potential buyer. Thankfully, there are always ways to create the best course of action for all involved. Be sure to check that repairs and maintenance rules are clearly outlined in the contract.
How do you know if rent to own is right for you?
If you are one of the many first-time home buyers who get overwhelmed and confused about down payments, loans, credit scores, and closing costs, knowing there are other options out there can ease some of that fear. Rent to Own is different, rather than a down payment, which can vary in cost based on the percentage you have to put down, they have option fees that will be taken off the purchase price. Most run around $5,000 which is extremely more affordable for first time home buyers. If your finances seem like they are preventing you from moving past that apartment stage, talking to an agency about rent to own could be the key to getting you into your own home. Many people struggle with their finances, so this option is not to be seen as a poor person’s choice. You waste more money in an apartment because you have no investment and no return. Apartments benefit the landlord, homes benefit you the owner by building equity, which is the money you will see when you sell in the future. Rather than trying to slowly, slowly, save to buy a home renting the home with the intent to purchase could just be the solution you are looking for! Rent to own is one of the smartest ways to get you into a home.
Reach out to Rent Holy City for more detail on how you can stop throwing away money and start seeing that rent go towards your first home!