Rent-to-Own Homes: How the Process Works

If you’re like most home buyers, you’ll need a mortgage to finance the purchase of a new house. To qualify, you must have a good credit score and cash for a down payment. Without these, the traditional route to homeownership may not be an option.There is an alternative, however: a rent-to-own agreement, in which you rent a home for a certain amount of time, with the option to buy it before the lease expires. Rent-to-own agreements consist of two parts: a standard lease agreement and an option to buy. 


In a rent-to-own agreement, you (as the buyer) pay the seller a one-time,  nonrefundable, upfront fee called the option fee, option money or option consideration. This fee is what gives you the option to buy the house by some date in the future. The option fee is often negotiable, as there’s no standard rate. Still, the fee typically ranges between 2.5% and 3.5% of the purchase price. In some contracts all of the option money is applied to the purchase price at closing.

It’s important to note that there are different types of rent-to-own contracts, with some being more consumer friendly and flexible than others. Our Lease-option contracts give you the right – but not the obligation – to buy the home when the lease expires. If you decide not to buy the property at the end of the lease, the option simply expires, and you can walk away without any obligation to continue paying rent or to buy.

In most cases you and the seller will agree on a purchase price when the contract is signed. Many buyers prefer to “lock in” the purchase price, especially in markets where home prices are trending up.

Maintenance: It May Not Be Like Renting 

You will  be responsible for maintaining the property and paying for repairs (we deal with well kept homes).  sellers are ultimately responsible for any homeowner association fees, taxes and insurance. they typically choose to cover these costs. Either way you’ll need a renter’s insurance policy to cover losses to personal property and provide liability coverage if someone is injured while in the home or if you accidentally injure someone.

Who's an Ideal Candidate for Rent-to-Own

A rent-to-own agreement can be an excellent option if you’re an aspiring homeowner but aren’t quite ready, financially speaking. These agreements give you the chance to get your finances in order, improve your credit score and save money for a down payment while “locking in” the house you’d like to own. If the option money and/or a percentage of the rent goes toward the purchase price – which they often do – you also get to build some equity.

The Bottom Line 

A rent-to-own agreement allows would-be home buyers to move into a house right away, with several years to work on improving their credit scores and/or saving for a down payment before trying to get a mortgage. Of course, certain terms and conditions must be met, in accordance with the rent-to-own agreement. Who ever assists with the process, it’s essential to consult a qualified real estate attorney who can clarify the contract and your rights before you sign anything.

It's a win win win situation there are families that would love to have a home, and you want to sell your home.
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