Do you want to rent a home and later become a homeowner? If you find that you are living somewhere and you absolutely love the community, the area, the neighborhood, and your job, then you might be wondering – how can I make this temporary move permanent? By looking into the rent-to-own process, you can turn dreams into reality. Let’s see the process of how renters become homeowners and how you can go through the rent-to-own process to have permanent residents in your ideal community.
The rent-to-own process – what you need to know
If you are the same as the majority of homebuyers in today’s market, then you will have to go through a series of steps to get a permanent residence and afford a house. The main steps are obtaining a mortgage so you can afford to finance a house without going into debt, qualifying to have a good credit score that is either in the Good or Very Good range, and containing enough capital, assets, or money for a down payment for the house. However, what if you do not have one or more of these prerequisites to owning a house? Just because you don’t qualify for the “traditional” route of owning a house, this doesn’t mean you are out of luck – just check out the rent-to-own process.
Rent to own process is a type of agreement that a person may make with the current owner of the building that involves you making a deal to eventually own the house. You can rent a home for a predetermined period with the option to buy it before your contract expires – if you find that you enjoy the area and you want to stay, then you can then move on to buying the house.
- Upfront fees – the first step of the rent-to-own process is paying the upfront fees. Unfortunately for renters, these are non refundable – you have to pay these regardless of whether you purchase the house or whether you rent. You will have to pay the option fee that gives you the “option” to buy the house at a later date.
- Lease option or lease purchase? There are different types of rent-to-own schemes that you can have with your landlord. Make sure you read the details before you choose the process that works for you, as some are more lenient and versatile than other options. If you want to have the chance to buy the house without an obligation to buy the issue at the end of the contract, then you can use the lease option. The other choice, the lease-purchase, means you are obligated to buy the house at the end of your contract.
- Choose the price – the third step of the rent-to-own process is agreeing on the price that you will purchase the house for. Make sure you come to an agreement with the seller when you sign the contract to avoid any changes at a later date.
- Including rent – the fourth step of the rent to own process is the rent that you will pay through the contract. The rent will typically be higher than you would find with a typical home or apartment since you will be putting in more money to purchase the house. The rent per month will be credited towards your later purchase if you decide to buy the home!
Conclusion
The rent-to-own process is a good idea for those who want to buy a house but do not have the prerequisites to qualify at this moment. For those who do not have good credit, can’t afford a mortgage, or do not have enough capital, using the rent to own a process is the best way to get permanent residence through the rent-to-own scheme.
Story by Brad Bernanke
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