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How Does Rent-To Own Work

April 15, 2012 | Comments: 0 | Views: 96

You have found a home in an area that meets all your dream house list of desires. But, when examining the list of financial requirements, you find this house out of your reach, financially, at this time. But, do not get discouraged because there can be other options to purchasing this home. Have you heard the about Rent-to-Own and Lease-to Own?

Here is a brief explanation to get you heading in the informed direction:

Rent-to Own and Lease-to-Own:

Rent-to-Own and Lease-to-Own can be two great options to consider. Rent-to-Own, basically, is paying rent which includes extra money towards your down payment, each month. Whereas, the Lease-to-Own contract is like leasing a car with similar types of terms. With the Lease-to-Own agreement you rent for a certain established period of time with an option of purchasing the home at the end of the agreed period. As with the Rent-to-Own, the Lease-to-Own agreement is similar where you pay rent with a portion of that amount going toward the down payment to buy the home.

The Contract:

Both renters and sellers need to be very clear about the contract of Rent-to Own or Lease-to Own when they draw up their terms before they agree to this arrangement.

You are still buying a house, though through a lease, which means you should have a home inspector inspect the property.

To avoid possible problem later, depending on your State, hire a Real Estate Agent or a Real Estate attorney to review your agreement.

You should examine all options available to you before you decide to enter into any type of agreement.

As with renting you should take photos of the property before or when moving in. And, make sure that all inspections including the walk though are signed and initials by all parties.

You should get Title Insurance. You need to know the history of the property before agreeing to make a purchase of the home. And, a Title Company can assure that there are no existing judgments or liens against the property when you enter into your agreement.

Renting-to-own have advantages and disadvantages for both parties.

Benefits to Sellers:

This enables Sellers to purchase a new house without paying two mortgages if they have been unable to sell their home in a slow housing market for selling homes or a market full of an inventory of homes available to buyers.

Risks and Benefits to Buyers:

The advantage for Buyers who can't yet afford a house, or qualify for a loan in the present market may be able to get into their home more quickly.

Title Insurance will not protect the Buyer against any judgments filed against the Seller after the date the lease-option is entered into.

There are many different types of options for not only property but for land, too! As always it is a good idea to be well-informed before entering any legal agreement or signing a legal contract. While many contracts do have a cooling off period allowing you a specified time to back out of an agreement, it could still be a costly one.

This was just an introduction into the choices available to you when considering your first home, or your second home. You can get more interesting and informative trivia and tips delivered right to your in-box on How Does Rent-to-Own Homes Work and more by visiting And, my thanks for visiting you will receive a FREE 7-part ecourse.

Source: EzineArticles
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