Rent to own homes is the best option for people who still need time to buy a house.
Nevertheless they do take the house on rent and enter into a rent to own agreement with the owner. The agreement must state the rules to which you and your landlord both agree regarding the duration of time the owner is ready to let you the flat after which you may buy it.
This is called the option period and very often this may be as twenty for months or long as five years. You must be able to get a real estate mortgage for this home before the option date has expired.
What happens in case one is unable to buy within the option period?
If a person is unable to purchase the house let out for rent to own a house, then he loses all legal rights to purchase the house. Moreover you will lose the initial sum of money that you have paid to the owner a token for booking called the option fee. Further you will also lose all the rent credit that you have paid for renting the property.Again in case you want to increase your option period, you will have to pay some additional money or fulfil some criterion. You are probably thinking, what is an option fee?
The option fee is the non-refundable sum of money that you pay as a consideration fee. This is usually three to five per cent of the cost of the property. But it is most often negotiable. Do not forget to clarify whether or not the price has been discounted because you have taken the same property on rent.
The rent credits that I am talking about in the first half of this section is the portion of the rent that is compensated against the purchase price, only if you are paying your rent on time. it is a very common method but do not feel that if you are irregular in payment of the rent that you will get the credit. Do not forget to clarify this point on the agreement.
Steps you need to be aware before you are entering into an agreement
Rent to own homes are very effective strategy in case your credit score is not very good. If you are giving the idea a very serious thought you must keep the following points in your mind.
Firstly, you must create and analyse your profile as a buyer. In case you have defects in your financial status then it must be got rid of before you are paying the option fee. Consulting a consultant and broker is must from the point of view that they are aware of the various pitfalls in the agreement and the various points you need to make sure as you are reading the agreement.
Your next search will be to take proper feedback from various resources regarding the property seller and talk to him. You must also look into the property papers. The term ‘rent to own’ is popular as other names like ‘lease to own homes’, ‘rent to own homes’ and ‘lease option’.
Colt is a Real Estate enthusiast and promoter of creative buying strategies, like rent to own homes. This strategy is can be beneficial to buyers and sellers alike. With that said, it is important to learn how rent to own works. You can read more about the benefits and process here:
Article Source: http://EzineArticles.com/7021786