Finding rent-to-own homes can require some creativity and savvy. Some of the best finds are properties in transitional areas where homeowners reluctantly backed into becoming landlords.
In most Troy, MI Rent to Own Programs, a portion of your monthly lease payment goes toward the home’s purchase price at the end of the term. It helps if you have a pre-approval mortgage and can work with a real estate professional to define the contract terms.
Know Your Budget
You may be unable to buy the house of your dreams for many reasons. For example, if you recently changed jobs, qualifying for a mortgage loan could be difficult because lenders want to see at least two years of consistent employment in the same profession.
A low credit score might also keep you from getting a mortgage loan. In that case, a rent-to-own home might be the right solution. You can move in today, focus on raising your credit score, and then purchase the home when your scores are high enough to meet a mortgage lender’s requirements.
When deciding to go the rent-to-own route, ensure you understand your budget and how much you can comfortably afford to spend on a home. It’s also important to learn more about the specific terms of your lease agreement. You might have to pay non-refundable upfront fees for future purchases or other related expenses.
Know the Market
As a rent-to-own tenant, you’ll probably be responsible for some home costs, including utilities and property maintenance. The homeowner may also charge you an upfront fee (called an option fee) when you move in that will be applied toward the final purchase price of the house when it is finally sold.
Rent-to-own agreements can be a good path for people who need more time to save for a down payment or build their credit score. It can also be a way to get into a desirable neighborhood without worrying about qualifying for a mortgage soon.
A real estate agent who specializes in rent-to-own properties can help you find the right property and work through any contract negotiations. They can also help you determine whether or not this type of agreement makes sense for your family’s situation. They can also explain the benefits and risks of a rent-to-own arrangement. They will have a professional network and experience finding and selling homes in your area.
Know Your Options
If you can’t afford to buy a house or your credit score is too low, rent-to-own programs like what you can find at https://www.michiganhomesellers.com/rent-to-own-program/ can be an excellent alternative. However, there are some risks involved with this kind of home purchase.
During the lease term, rent payments can often be applied toward the home’s final purchase price. In addition, you will usually pay an upfront fee called an option fee when you sign the contract to secure your right to purchase the property at the end of the lease.
You’ll also need to work with the current owner to determine who will pay for the property’s utilities, insurance, and maintenance. It’s important to perform due diligence on any property you’re considering, including ordering an appraisal, obtaining a home inspection, and ensuring that all the necessary taxes are up to date. You should also carefully read the terms and conditions of your rent-to-own contract before moving in. If you decide not to buy the property at the end of the lease term, you’ll forfeit your option fee and any additional rent credits.
Know the Process
Because the rent-to-own process is less regulated than other real estate transactions, each contract will have unique terms and conditions. Working with a knowledgeable and trusted real estate agent and attorney is vital to help you understand each agreement. You should pay close attention to the percentage of monthly lease payments that will go toward your eventual purchase price and how you can exercise your option to buy the property at the end of the contract. Other important details include pet policies, maintenance details, and property taxes.
It is common to pay a non-refundable fee up front ranging from one to five percent of the home’s purchase price. This is a great way to show the seller you have skin in the game and to ensure they honor their side of the contract. Be sure to ask the seller about their financial background and get a copy of their credit report before you agree to any contract.