Summary: A rent-to-own property can be difficult to find, but with a real estate agent, it can be possible. Sometimes, it’s all about knowing the area, the seller’s situation, and the market. Rent-to-own properties can be a great option for people who want a home but who don’t qualify for a mortgage yet.
Finding a Rent-to-Own Home
A simple option would be to ask sellers if they would be willing to consider a rent-to-own agreement. This can be really helpful if you’ve found your dream house, but you can’t make the finances work out yet. Some sellers are open to these agreements, especially if the house is in an area where homes sit on the market longer. In these markets, a lot of the sellers have already moved into their next homes and the longer the old home sits on the market, the harder it is to meet their monthly debt obligations for both mortgages. Many sellers are cautious about leaving a home vacant for an extended period of time. These sellers may consider a rent-to-own agreement, even if the home is not listed as such.
The Risks of Rent-to-Own
Rent-to-own properties can be difficult to find. A common question from home buyers is whether rent-to-owns exist or whether an owner would consider that option. There are rent-to-owns out there, but there are some things that you should understand before agreeing to a rent-to-own property.
A homeowner is taking on a very high risk when they offer “rent-to-own” as a possible financing option. In most cases, a buyer looking for a “rent-to-own” option has a pretty low credit score. Because the risk for the seller is higher, the terms for a “rent-to-own” are definitely favorable for the owner / seller. This means that there are less-than-favorable terms for a buyer. It’s safe to assume that you will need to provide a larger amount of money down, plus a higher interest rate than what a lender would offer. If you’re able to purchase a home by financing through a bank or lender, you may be better off.
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