Finding a rent to own house is one of the many ways someone with bad or no credit can buy a house. You will often find them called names like lease/options, lease with option to buy, lease purchase, lease 2 purchase, rent with option to buy, rent to own, or rent to buy homes.
There are a few differences between rent-to-own and lease-option agreements, although many people use the terms interchangeably. With a rent to own (or rent to buy) home, the buyer makes an agreement with the owner that part or all of the rent money will go towards the down payment of the home or towards the purchase of the home, and at a certain date, perhaps 2-5 years in the future, the renter will purchase the home, using the money that was set aside as the down payment or a reduction in sales price.
There is usually not much money put down in the beginning, outside of what would normally be needed for a rental home, so this is a good way to get into a home for little or no down payment.
Another advantage to a rent to buy situation is that if you compare how much rent money is applied monthly to the home price, even if it is only $200-$300, it will still be much more money paid on the principal of the house than if you had taken out a loan for it. If you look at how much money goes to the principal payment of a home with a typical mortgage loan, you will find that most of your mortgage payment in the beginning is just paying interest on the loan. A rent to own agreement, where the money goes directly to the payment of the home, could be saving you a lot of money in the long run.
With a lease with option to buy, a renter signs a lease agreement (often for a shorter period of time, like 1-2 years, but it could be longer). The renter/buyer usually pays a sum in cash, usually non-refundable, to the owner in agreement to buy the house at a later date for the price agreed upon. The renter has the option or right to buy the home, so in the end they have a choice and can back out it they want. Some of the rent paid may or may not go towards the purchase price of the home.
Again, the terms “lease option” and “rent to buy” are pretty much used interchangeably today, so check with the owner to find out exactly what terms they are offering. Or approach an owner with your own offer for renting to own.
If you are a renter who is tired of paying someone else’s mortgage and want to own your own home, this is one of many ways that you can buy a home. One of the drawbacks is that you will still need to purchase the home at a later date. This may be a problem if you have bad credit, because you may still need to qualify for a loan when it is time to purchase the home. If your credit can be repaired in several years, this may be a great way for you to get your home now, and good motivation to clean up your credit for the future.
Visit www.TriStateLeaseOptions.com for more info.
Tri-State Lease Options LLC specializes in Rent to Own (Lease/Option) homes. We help homeowners get their homes rented with an option to buy.
Tri-State Lease Options is owned and operated by both a licensed Realtor, Dave Overholser, and a licensed Mortgage Loan officer, Salle Mickey. We started this business because we are both passionate about helping people with their home buying or selling process and this is an excellent buying and selling alternative to real estate that creates a win win situation for all parties involved. We are happy to consult with you and answer any questions you may have about the process, just give us a call or email at your convenience.