Buying a home does not have to be an impossible dream if you have poor credit or are struggling to save the deposit necessary. Some people have successfully bought homes through rent-to-own agreements with sellers. If you are considering a similar agreement, here is what you need to know.
Is It the Right Decision?
Rent-to-own agreements can be beneficial for both parties. As a home buyer, you do not have to worry about qualifying for a home loan at this moment. You should consider the deal an option to buy in the future. You can move into the home for the usual rental amount. If you do decide to buy the home later, part of your rental payments will be applied towards the purchase of the home.
Since you do not have to qualify for a home loan now, you can work on your credit, if necessary. By the time you do decide to buy the home, you can likely land a better interest rate, which will help you save on the overall cost of the home.
A rent-to-own agreement also means you get the chance to check out the neighborhood in which you want to live now. Instead of moving into a home and discovering that the neighborhood is not what it appears to be, you will have years to learn the landscape.
In addition to these benefits, you and your family will not have to move if you decide to buy the home. This can help you save on all the expenses that typically come with moving.
What Should Be in Your Agreement?
What is and is not included in the rent-to-own agreement is important. You want to be sure the language is what you and the seller have agreed to. You also want to ensure that it will legally hold up.
The agreement should include the length of the rental period and how much you will pay monthly. It also needs to include how much of your rent will be paid towards the purchase of your home.
If you decide not to buy the home, the agreement needs to state what happens with your rent credit. In some instances, it is returned. In others, the seller keeps it. Regardless of the arrangement you and the seller make, it needs to be stated in the agreement.
A real estate attorney can help pinpoint other issues that should be addressed in the agreement. There are state specific laws and restrictions that need to be considered. If the seller presents you with an agreement, do not sign it until an attorney has reviewed it. Contact firms like Garcia, Kinsey, Scott & Villarreal, P.L.C. for more advice.Share