Rent-to-Own Can Be a Smart Option

For some prospective buyers, the rent-to-own option is the only avenue to homeownership. If your credit is less than desirous or you have experienced a divorce or other life catastrophes, this method could be the answer. The lease purchase option is also a great way to build credit if you have none. There is considerable advantage in testing the waters before you dive in if you are not sure of owning your own home. Consideration of the positive and negative aspects is important before entering into any sort of legal agreement, especially when it concerns something as substantial as real estate.

Buying Time as Well as Real Estate

So you really want to become a home owner, but you are not sure if your credit rating is up to snuff. A bad credit rating can seem like a nearly impossible obstacle to surpass, but this need not inhibit you from making your dream of home ownership come true. Entering into a lease purchase option arrangement allows you to prepare yourself for home ownership. It gives you the time and the method to build up your credit rating before you officially become a property owner. After all, nowadays it can be nearly impossible to secure affordable home financing if you have less than good credit. When you enter into this kind of contract, you secure the purchase price until you are ready to assume the mortgage. Generally homebuyers pay rent in addition to the portion that is set aside as “down payment” money. Each subsequent payment that you pay on time helps boost your credit.

Becoming Familiar with Responsibilities

Besides building or improving your credit, another major advantage of entering into a lease purchase option is that it gives you an intimate look at home ownership. If you have always rented, you may not be aware of the many additional expenses a homeowner is subject to such as HOA fees. Maintenance and repair of interior and exterior structures and features of a home can be daunting at times and there will be significant costs in taxes and insurance to consider.

Read the Fine Print before Entering into a Lease Payment Option Agreement

Make sure that you fully understand the terms of your lease option agreement. Make sure that you are aware of the consequences for not making your monthly payments on time. In some cases, you may lose the right to purchase the property or be otherwise penalized. If you back out of the agreement, you may lose the additional monies paid towards the down payment. Rent-to-own can be a great choice for buyers and even sellers in some circumstances. However, it is your responsibility to make sure that you fully comprehend the advantages, disadvantages along with legal and financial responsibilities you will be taking on. It is always best to do your own research from varied sources before you make a decision of this magnitude. Ideally, homebuyers should have a legal representative check out this kind of a contract before committing.