Prospective buyers should know about the different pathways to securing your dream house. In recent years, rent-to-own agreements have gained popularity as an avenue to becoming a homeowner. This unique arrangement, also known as a lease purchase or lease with an option to purchase, allows aspiring buyers to ease into their investment by renting the property before taking the leap into full ownership. Other financing alternatives to be considered may be owner financing whereas the owner acts as the bank and the buyer would have to meet certain terms as set forth by the seller.
With extensive experience in different types of purchase agreements, Guidry & Company Real Estate will cover the intricacies of these contracts, and share the essential details that can make all the difference.
Why Rent-To-Own?
Rent-to-own agreements allow buyers to rent a property for a specific period, with the option of purchasing in full at the end of the lease.
This proposition may be enticing for individuals who:
- have limited down-payment options
- do not yet qualify for a mortgage
- are not confident they’re ready for a full-purchase commitment
Rent-to-own leases benefit aspiring homeowners, as they can lock in a lease for a house they are interested in while they save money and build credit for the eventual home purchase. For those with unique financial or work situations, an owner-financing agreement is an option worthy of consideration.
What to Know Before You Sign
While rent-to-own agreements help open doors to homeownership, there are conditions you should know before signing onto one.
- A property can only be eligible for this type of financial setup if the seller is financially capable or if it is already paid off in full by the seller. Houses with a remaining mortgage cannot be listed as available for owner financing.
- Missed payments can quickly result in foreclosure or cancellation of these agreements. To avoid this, the buyer and seller should seek to include a clause in the lease that reverts the property to the original owner should more than two payments be missed.
This precautionary measure protects the original owner and serves as a reminder for the aspiring homeowner to stay committed to their financial obligations.
Other Benefits of the Deal
Apart from creating another avenue for buyers to get their dream home, rent-to-own agreements have numerous additional benefits. If the leaser signs a contract that does not require end-purchase, it gives them an extended time to decide if they love a property and its location. These deals provide a genuine try-before-you-buy experience. Aspiring homeowners can also use that time to further research and observe market appreciation and property value for their area. This can help the buyer ensure they are planting roots in an area with projected growth. Alternatively, in an owner financed sale, you are a homeowner whereas you may not have been able to obtain the mortgage otherwise.
Guidry & Company Real Estate Can Put You on the Path to Homeownership!
If you think an alternate financing agreement could be the right choice, Guidry & Company Real Estate is here to help you cover all your bases. With our extensive experience in alternate financing agreements, our REALTORS® can make it easy for you to find properties and consider any contractual obligations before signing. Begin your path to homeownership today by visiting our website or giving us a call!
