Secrets You Should Know About A Rent To Own Home Deal

So you are sick and tired of renting. I want to have my own home, but there isn't much down payment. No doubt you've heard the "perfect solution"-the rent you own. But it's as perfect as everyone says-almost none. There are some secrets about rent to own a property that you need to know. They are the most overlooked aspects of rental contracts. So let us find the truth about leasing to our home.

Rent structure

This is how it works. Rent a house with purchase options. The lease term is usually 2-3 years. The seller also expects to place some advance payment or optional fees. This is usually 1-7% of the agreed purchase price. In addition to rent, you will pay what is called a rent premium or rent credit. This additional amount will be added to the purchase price of the house.

Let's see what happens in rent in Salt Lake City, Utah. As of January 2017, the median rent for a three-bedroom, two-bath house in Salt Lake City is $ 1,500. You can now negotiate the additional amount you pay for the purchase. Usually you should expect to pay 20-50% of the market rent. For discussion purposes, let's keep the average 25%. Therefore, you will pay $ 1,500 per month for rent and an additional $ 375 for purchases. If the lease lasts for 3 years, you will have a rent credit of $ 13,500. The median home price in Salt Lake City is $ 280,000. If you pay a $ 8,400 3% option fee and combine it with rent credits, you get a $ 21,900 or 7.8% down payment. not bad.

The truth about rental housing

Want to know a dirty little secret that most buyers in your position don't notice? If you decide at the end of the lease that you can't buy a house or you don't want to buy it, all your money will be forfeited. This includes rent premiums and option fees. Had disappeared. All of it. The seller holds all the money and you can call the moving van and start over.

You will be surprised how many times this happens. Buyers may encounter some problems at home and they want to go out. I lost money. Buyers may not be eligible for mortgages. I lost money. Or imagine that a seller fails to pay a mortgage and the property is seized. Wow! I lost money.

Therefore, make sure you do due diligence and have the house inspected before competing to snap the rent closest to the property of the property you own or rent. Start working with lenders to qualify for a mortgage and make sure you absolutely love the house.

But the calculated decision to rent to own a house also has its own benefits.