Rent-to-own homes: good idea or bad?
While many would-be homeowners are seriously considering the notion of acquiring a property through the rent to own option, this is clearly not for everyone. Just like everything else, acquiring rent to own homes has its own share of pros and cons. Do you think this option is right for you? To help you make a more informed decision on whether or not you should consider this option when buying a home, here are some things you may need to consider.
No credit requirements. If you seriously want to purchase a home but are unable to acquire a loan through traditional channels, then this option can be a more viable alternative since it only requires you to pay the normal security deposit plus the option-to-buy deposit. Since there is absolutely no hefty down payment to be made, owning a home can very well be within your reach.
You build your home equity with every payment. In a rent-to-own agreement, the option deposit and a portion of your monthly rent is credited toward the price of the property. As such, you can be sure that you are building your home equity month after month. In addition, by choosing to go for the rent-to-own option, you will have the time you need to build your income and repair your credit.
Minimal expenses. In such an agreement, the seller is responsible for all major maintenance issues and property taxes. This can give you a much-needed break while you work on repairing your credit.
No risk of foreclosure. By going for the rent-to-own option, would-be homeowners do not face the risk of damaging their credit score or going through a foreclosure in the event that they lose their job.
While the prospects of owning a home through this option seem to be attractive enough for a lot of people, there are a number of disadvantages associated with such an agreement. Aside from the higher purchase price, buying rent-to- own homes have the following drawbacks:
You risk losing money. If your finances are way out of order and you fail to buy the property after the lease period, you face the risk of losing your option deposit along with all your rent credit money. In addition, most rent-to-own agreements do not credit late rental payments so those who find difficulty in keeping up with their rent may eventually find themselves in trouble.
You may face eviction. Make sure you read through the terms of your agreement to minimize the risk of eviction. If you are not confident that you can abide by the terms, then do not enter into such an agreement.
Your contract may be cancelled. If the property has been acquired by a third party, the new owner is not bound to honor your contract with the previous owner. As such, the new owner can terminate your contract without refunding your money.
Owning rent-to-own homes has its own advantages and disadvantages so you need to think things over a little more carefully before making any commitments. If you are sure that this is what you want and you are confident that you can abide by the terms set by the seller, then go for it.