Should I Rent To Own My First Home?
Is Renting To Own A Home A Good Option?
When you purchase a home whether you decide to purchase through a mortgage company, bank, or rent to own a down payment may be required. When renting to own your down payment may be non-refundable and only a small percentage may actually go towards the purchase of the home. You may also be responsible for any maintenance and upkeep of the property whether you are renting or purchasing.
Why were rent to own home programs created?
Essentially rent to own programs were created to help consumers that did not qualify for a mortgage get into home. These programs are targeted towards consumer with less than perfect credit. Even though the programs are targeted at consumers with less than perfect credit, your credit score and profile will still have to meet certain banking qualifications at the end of the rent to own agreement in order to purchase the home.
Different types of rent to own programs.
When you decide to rent to own a home you will be presented with two options:
Lease-Option
Lease-Purchase
Lease-Option gives you the opportunity to lease/rent a home for a specified amount of time with the option to purchase at the end of the lease.
Lease-Purchase is an agreement for you to lease/rent for a specified amount of time, and at the end of the specified time you agree to purchase the home.
Good, Bad, & Ugly Truth
Most times a down payment will be required when you rent to own or finance a home. When renting to own a non-refundable down payment may be required, and when you purchase with a mortgage you may need a down payment, closing cost, and earnest money.
The down payment that you put down on a rent to own home may not be refundable and may not be used towards the purchase of the home if you break your agreement. The down payment, closing cost, and earnest money that you may have to put down for your mortgage will actually go towards the purchase of your home and securing your mortgage.
With a mortgage, when you make your monthly payments, your payments actually go towards the financed amount of your mortgage. When doing rent to own only a percentage, for example 25%, of the money you pay for rent goes towards the actual purchase of the home at the end of the lease agreement.
Rent to own homes are normally higher priced than regular rental homes. They are slightly higher because if you can remember earlier I mentioned than a percentage may go towards the purchase of your home. That will help you to have a larger down payment and it will also help the landlord to be able to make more money off of the deal.
While you are renting/leasing the property you may be responsible for any maintenance and upkeep of the property that you are renting/leasing.
With either option when it is time to finance your credit scores will need to be acceptable and you will need money saved. Rent to own programs are designed to help consumers who may not have a down payment or low credit scores. rent to own homes may also be priced higher, and have more fees and higher interest rates.
Is your credit score or lack of finances pushing you towards rent to own?
If your lack of finances or having a less than perfect credit score is pushing you towards renting to own a home, you may still face those same problems at the end of your rent to own agreement.
If you decide to rent to own because your credit scores are low, you will still need to have a decent credit score and meet certain credit qualifications to get approved for a mortgage at the end of the rent to own agreement. You may also still need savings available. What if you have maintenance cost to maintain and that cuts into your savings.
Is rent to own a ripoff?
After everything you have consumed above you tell me your honest thoughts on rent to own? Do you think it's actually worth? Are they actually helping you or are the homeowners profiting more? That is going to depend on the actual rent to own agreement that you make. Make sure you review everything in detail and understand everything in the agreement.
Personally, I would not purchase a home through a rent to own agreement. I purchased my home through a mortgage lender.