Small Business Insights

The prices of homes have sunk to all time lows and the people who loan money to buy those homes are becoming very picky about who they lend their money to. Therefore, homeowners and potential homeowners are stuck in a situation that is less than ideal. There is another option available that is ideal for both parties, and that is rent to own.

When parties agree to a rent to own lease agreement, the home is not sold to the buyer as in a traditional situation. Rather, the seller becomes a landlord for a certain amount of time which is outlined in the agreement. Traditionally, this type of lease lasts for two to three years. During each month of this lease, a portion of each payment is applied to a down payment for the real estate. At the end of the specified term, the renter/purchaser will purchase the house.

Rent to own homes are an ideal situation for people who are not able to come up with the thousands of dollars required to gain a traditional mortgage, or who do not have a high enough credit score to qualify for one. When a family considers renting homes, they are able to build a solid history of good credit while at the same time they build equity into the home that is soon to be theirs. It allows them to repair dinged credit while becoming prepared for responsible home ownership.

Another bonus to these lease agreements is that the originally agreed upon purchase price will not go up at the end of the lease. This can be a safety net in case housing prices go up in the near future.

The original owner of the home also benefits because the renter pays a deposit and they choose the amount of the initial deposit which is non-refundable. Also, the homeowner can feel free to charge higher rent than they would if the lease was for a typical renter.

There are many benefits to renting vs owning a home. Some of the greater benefits include not paying homeowner taxes. Upkeep on the home and lawn is not the standard renters responsibility. If something needs to be maintained, a renter can call the landlord to fix it. If a family is new to an area and do not know their surroundings very well, they may choose to rent for several months or even a year so they can get to know the area before they choose a permanent home. Other folks just prefer to be mobile and unencumbered with a house.
 
If a person or family has decided that a house will fit their needs, a rent to own agreement may be the right choice for them. Keep in mind that the best rent to own homes are available if you click this website.