Are you tired of paying rent month for the house that you are staying in? To be frank, there are a lot of people still having a dream of owning their own home as part of financial success. Along with that, it is also considered as a great investment. But, really buying a new home in this generation is not at all the easy task. There are a lot of home loans are available now for people to buy their dream home. But there are some difficulties that will occur during or after getting the loan. If you have got stuck in such problems, then here comes the rent to own for you to fulfill your needs.
How Rent to Own can Work?
Basically, this rent to own process is having more moving parts than the traditional loan, it is not that much tough to understand. Have a look at below to find how it works.
You have to find out the home which you are going to buy on the agreement of the rent to own process from the owner who wishes to sell their home on particular terms. Here, you and that sell must agree on various processes.
- The buying rate based on the current market value on a fair basis
- The monthly rental fee must be given
- Length of the total time that you will rent before you are going to buy
You have to typically sign 2 documents in the transaction of rent to own:
- The standard rental lease agreement
This is the process and it will details the terms of leasing the property and monthly rent before you are going to purchase in a most extraordinary manner.
- Option to buy agreement
This process will mainly detail the complete purchase terms effectively. These terms mainly include the rate in which you have agreed to make the payment for your home. It is mainly in case you have decided to proceed further to buy, then the particular timeframe to buy the home, the upfront option fee, and the amount of the rent credit.
Benefits of Rent to Own:
- Less out-of-pocket cash required
Here, the buyer can only pay the one time option to purchase fees instead of the down payment. Basically, the down payment is 20% of the home’s purchase price and it will be paid to the lender of the mortgage. Whereas here, it is only 3% to 5% of the buying cost and it is paid to the seller
- Locked-in Purchase cost
You are locked in the agreed purchase cost in the rent to own agreement in a most effective manner. When the value of the property gets involved during the lease, here they have to sell their property to the accepted rate. This is mainly considered as the huge discount which occurs in the expanding markets in a top-notch manner.
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- Immediately start building equity
The major advantage of the rent to own is basically the option of increasing equity without reducing the sizeable down payment or else having the credit to apply for the home loan. In case the value of the home appreciates from the accepted purchase rate, then you will have quick equity at the time of buying the home.
- No Property Taxes
When you are started to make use of the impact of the rent to own, then sure there will be no property taxes for you. Hence at the time of leasing the home, you can concentrate on other tasks.
- Immediate move-in time
Typically you can take ownership of the home in 1 to 2 weeks instead of traditional move in a time of 1 to 3 months after the offer is agreed. This is one of the most important parts since your approval will be mainly chosen by the seller or owner instead of the lender who regularly takes around 45 to 60 days to process and approve the mortgage.
Really you are spending only less amount of money to manage the most expensive and the most profitable part of the real estate process in a most extraordinary manner.
From the above-mentioned scenario, you can able to explore the rent to own – buy a home without a down payment. So finally, you have understood everything about the process of rent to own. Therefore start making use of it and grab the complete advantages.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.