Are you tired of paying rent, and want to buy your own house? But don’t have enough deposit or enough credit to qualify for the mortgage? Then you have come to the right place, and we also have news for you that, you can buy a house by paying rent. Well, there are different names of this program, some call it ‘rent to buy’ while some know this program as lease to own and lease to option. But there are a lot of things that you should know before jumping on the very first opportunity you get by consulting Homes rent to buy experts.
Here we have listed 07 pieces of information that rent to buy aspirants can’t know no matter how many books you read on property purchase. The list contains brief information of basic terms used by the realtor and some unspoken rules that every lessee should know before jumping into the market and signing a Homes rent to buy agreement.
1. Non-Refundable Deposit
The first thing that every realtor will tell you is, you won’t get your rent back once you enter into the agreement of Rent own homes. This news must be new for you if you have lived your entire life on paying rent. And another thing is, you can give a deposit as low and $1.
You must be wondering how it is possible? Well, this program is inspired by the rent but the goal of this is to empower people to buy their own house by saving 20% on the rent. And, your friends, who say they bought a house by paying $1. Well, that is because they have opted for the rent to buy the program.
2. Difference Between Rent To Own And Rent To Option
The next thing that you need to know is the difference between rent to option and rent to buy. Prior one means, you won’t be obliged to buy the house by the end of the lease agreement, while the late mean, you had to buy the house whether you like it or not, once the term expires. Moreover, if you try to opt-out of the agreement, then you’ll have to settle the matters with the freeholder in court.
3. Pre-Agreeing On The Property Price
The third and the most important thing about the rent to buy property is deciding the property’s worth. There are two ways you can do that, first, lock in the price beforehand, and secondly, leaving it till the lease expires. And the best way to decide is by review the property performance in the past 5 to 10 years. Along with consulting an expert to get an idea of where the price will be in the future. Once you lock in the price then no matter how a real estate market performs you have to pay the exact amount, it often results in a loss if the worth falls below the expectation.
4. Rent Credit and Deposit
Another thing is how to calculate the rent credit. Here you also need to know that in rent to buy the program, the price of rent is usually set higher than the market, because the 20% is beginning to save as a deposit. The quickest way to calculate the rent credit you have to take divide the rent by 20 and multiply it by the number of months in the lease period, and you’ll get the deposit amount.
5. Home Maintenance Agreement
Among any program, this point holds a special place in rent to buy. Usually, it is the responsibility of the homeowner to pay the maintenance charges but sometimes, the freeholder tries to pin it on the rentee. Therefore it is recommended to read the agreement and ask the real estate agent to explain the term of maintenance out loud.
6. Buying A Home After The Lease Expires
Like we have said above that there are two types of agreement, rent to option AKA lease to option and rent to buy. Another thing that you will not get by reading a book is you can apply for a mortgage once the lease expires. And, if you don’t like the house then you can either opt-out r sell the lease to another person.
7. Qualification Criteria For Rent To Buy
There are multiple criteria set by multiple realtors, like in DreamAmerica, you need to have a credit score of 500 above, along with 4000 monthly income, and 404K, or gift, etc. to qualify for the rent to buy programs. Other than this, you’ll be asked to showcase the proof of paying at least 12month rent on time.
Saving up to buying a house when you are living check to check is often not easy. Therefore to lessen the worries and to empower the renter to buy their own house, the rent to buy program was introduced. Under this program, the rentee has to pay a hefty sum of rent on the property and 20% of which is saved as a downpayment. To learn more about how the program works in a different state, you have to consult regional realtors.
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