If you don’t have the money to buy a home, yet, an alternative option to homeownership is by renting one. It’s a method that gives people – who think homeownership is impossible in the meantime – the chance to obtain their dream home.
While some real estate property owners prefer to sell their houses to we-buy-houses companies, like Leave The Key Homebuyers, others offer rent-to-own to potential individual buyers. In such a setup, a person rents a house intending to purchase it later on. The sale price for the home can sometimes be dependent on the future appraisal or get included in the contract immediately. The exact date when the renter buys the house also gets indicated in the contract.
Depending on what the renter and the landlord have agreed upon, insurance, taxes, significant repairs, and routine maintenance should get taken care of by the buyer or the seller.
But, what are the benefits of rent-to-buy homes for tenants? Look at some of them below.
No Down Payment Required
Other than the rental deposit, owning a rent-to-buy property doesn’t require a downpayment. The good thing about it is that some of the rent payments will serve as part of the cumulative down payment for the property.
For the renter to be able to buy the home in the date indicated in the contract, they’ll make use of the down payment from part of the rent money to get a mortgage.
Invest Your Rent Money
A portion of the money you’re going to pay when renting a home that’s up for sale will form the down payment. You can use it to avail of a mortgage and purchase the house later on.
What happens is that the rent money becomes an investment, instead of going into the pocket of the landlord. In most situations, when purely renting out a home, the money from every payment you make will be under the control of the landlord, and they can do whatever they like with it, including paying for the amortization of the property if it’s still under a mortgage or other personal use.
You Might Not Pay For Taxes And Insurance
Although it doesn’t happen all the time, paying for the taxes and insurance of the property may not become the responsibility of the renter. Though, it depends on the contract you’ve signed. Thus, it’s essential to negotiate with the landlord before making commitments so you can weigh things out better.
The renter usually only has to pay for a type of insurance that covers what’s inside the home until they finally own the property. With this kind of setup, you can save money from hefty tax and insurance expenses.
Your Credit Score Won’t Matter That Much
Rent to buy houses are perfect for individuals having credit scores that are less than ideal.
The setup works like a mortgage since payments for the rent will go toward purchasing the home. The only credit that matters is the one you established with the landlord since they’ll use it to justify the property’s sale and transfer of deed once you’re ready to buy the house.
Check If You Can Be Comfortable With The Home Or Not
Another good thing about rent to buy homes is that you’ll have enough time to find out whether or not you’re comfortable with the location and the surroundings of the house first before obtaining a mortgage for it.
Some of the things that you can look into are the neighborhood, the schools, and other amenities nearby.
You always have the option not to continue with the purchase if you don’t find the home ideal for the needs and safety of your family.
You Don’t Have To Wait Longer Before Moving In
It takes months before you’ll get the chance to move into your new home through typical property purchase and mortgage setups.
On the other hand, with rent to buy homes, after signing the contract document, you only have to wait for a week or two. After that, you’re all good to move to your dream house and enjoy it with your family.
Have A Better Chance Of Assessing The Property’s Condition
If you want to gain information about a home first before purchasing it, rent to buy houses is perfect for you. You’ll discover all of those components – roof, foundation, HVAC, and others – that require a significant repair even in a short period of living in the property.
This will give you a clear picture of the current condition of the house and will help you decide whether to go on with the contract or find a better deal.
Get Full Control Of The Property
With rent to buy homes, you have full control over the house, and you can make improvements whenever and wherever you like. It’s something that isn’t ideal if you’re only going to rent the house and won’t have the chance to own it in the future.
That said, the most significant benefit you’ll get from getting full control over the home is that the equity grows faster. It’ll mean paying less for the purchase price when it’s time for you to make your last payment.
Fixed Purchase Price
As already mentioned above, depending on the contract, the sale price of rent to buy homes will depend on its future appraisal. However, a fixed purchase price is also possible, so don’t forget to negotiate with your landlord about it.
What does a fixed purchase price mean? It means getting the same price for the property from the beginning to the end of the contract, which is ideal if you want a more secure deal. Thus, the amount of money you’ll pay for the entire house won’t increase – a risk that’s common in agreements where the price of the home gets determined by an independent appraiser at a later date.
With all the benefits discussed above, it makes sense why tenants are willing to pay higher rent for rent to buy homes. After all, they’ll eventually own the house.