Rent-To-Own
A rent-to-own purchase agreement (also known as a Lease Purchase or Lease-to-Own Purchase) is a lease combined with the option to purchase the property after a specified time period, usually 3 years or less at an agreed upon price.
The renter/borrower would pay an option fee of 1-5% of the purchase price which is credited toward the purchase. The borrower would pay rent as well as an additional rent premium which would be credited toward the purchase price each month. If the renter choose not to buy after the specified time period, they would lose the option fee as well as the additional rent premium paid to the seller.
Although this seems to be more to the benefit of the seller financially if the option is not exercised, there is benefit to the buyer as well. Buyers can choose not to use the option if they determine that the home or neighborhood has undesirable qualities that were not detected prior to the agreement. Some contracts may also offer the option for the buyer to sell the option to purchase if they choose not to exercise the option for themselves.
This lease/purchase arrangement offers an opportunity for homeownership to buyers who would otherwise not be financially viable mortgage prospects due to credit issues, lack of income, or low credit scores. While renting, they can build credit while also building equity in a home they will someday own.
It would be beneficial to both seller and renter/borrower to use the assistance of an experienced Realtor to execute the contracts and make sure both parties are aware of the specifics of the agreement. Because of 30 plus years of combined experience with documents and purchase/rental agreements, Camara & Co. - The Real Estate Group are the logical choice to assist you with your rent-to-own agreement. Whether you are the seller or the potential buyer, we can help you to make sure that all bases are covered and you are getting the best deal possible.
Contact us today for more information about Rent-to-Own.