The world is constantly evolving, which means that economic, social, and political structures are changing too. The real estate industry is no exception. You no longer have to wait for mortgage approval when buying a home.
Rent to own homes is a substitute for the conventional way of buying homes for people who want to buy a home immediately benefit most from it. The lease is based on renting the home for a specific time, after which there is an option of purchasing the house.
The process is comparatively more complicated than a conventional rental. A specific procedure needs to be followed before finalizing the deal to make it a great choice. We have enlisted basic steps to make the procedure of buying a rent to own property easy.
Personal Requirements from Rent to own Home
There are two main kinds of rent to own property contracts lease option and purchase. Individuals have the choice of buying the home in the first option. In the latter option, you have to buy the home anyway.
The next thing you need to decide is the affordability as in rent to own home, a small down payment has to be paid, which is 3-5% of the purchase price. In future, it contributes towards the down payment, which you eventually have to pay. But the amount is nonrefundable; hence it should be a calculated risk.
Rent is also above average for the property since it also incorporates the down payment. Monthly rent needs to be on time, or else you will lose the extra money that has been paid, and there is a risk of the contract being terminated. Therefore, individuals can’t stop paying the rent at any cost.
The house you choose should be inspected before buying. Look for problems in the property and address them before signing the agreement. Experts in real estate sales such as Stop Renting Albany should be consulted as they know the legal requirements and can give you the answers you need.
Common mistakes to be avoided
First-time homeowners are the ones who are most prone to making mistakes. It does not depend on the housing scheme you opt for since errors can be made when buying a property. Small mistakes can cause serious problems. They should be avoided at all costs. We have created pointers that every homeowner should know before starting the process of acquiring your home.
- Lack of future considerations: Most people want to stop renting today without thinking about the future reliability of the house they want to buy. They tend to forget that homes cannot be changed or shifted easily.
- Not evaluating lending options: Rent to own homes will benefit the homeowner if bought in a popular area as the property’s price will appreciate in the future too. But it can depreciate too since many external factors influence property valuation. Most people buy the first property they find instead of exploring the market.
- Small down payment: Even though a smaller percentage of down payment ensures that the amount is less, but mortgage per month will be higher than those who have paid a higher down payment. The buyer will be at a loss in case of a smaller down payment.
- Miscalculation of costs: The agreements have everything specified from maintenance to purchase price of the house. Most buyers fail to understand the final amount due to incorrect calculations.
Hence these are some common mistakes and pointers that need to be considered when buying a home.
Frequently Asked Questions:
- Does it make sense to rent-to-own?
The first thing that needs to be considered before making a decision is confidence. Secondly, rent to own homes has many pros since homeowners are given the time to build on their financial position before making the down payment. Moving cost is also saved if individuals decide to buy the house once the lease ends.
- What are the disadvantages of rent-to-own?
Although it seems like a good deal like every contract, rent to own properties have drawbacks. A few are higher monthly payments, self-maintenance and insurance payments, future pricing, and market price.
- Is rent-to-own more expensive than buying?
Realistically, rent to own homes are more expensive than buying a home. But people who cannot buy a home through cash immediately or don’t have enough funds for a long term down payment are given the quick option of purchasing the house they live in.
Read also: Tips to Sell Your Home Fast and Efficient