How do rent to own homes work? For one thing, this type of agreement — that is, signing a lease with the eventual purpose of buying a home outright — is not confined to any one kind of housing. It is possible purchase low-income, middle-of-the-road, and luxury homes with a rent to own lease agreement. In fact, the number of luxury rent to own houses is skyrocketing, according to the Wall Street Journal.
Why are rent to own homes so popular, particularly in the luxury housing market?
It Gives Buyers Time To Sort Out Their Credit
Luxury homes require a much bigger home loan, and that means it is absolutely critical to have your credit in order. Sorting our your credit will significantly reduce your interest payments, which can make a big difference if you are paying considerably more per month than the average homeowner, or you are paying a mortgage for a significantly longer term.
Let’s Talk About Down Payments
It’s fairly obvious that luxury homes cost more money, and that means it is even more important to save up a larger down payment, if at all possible. And renting to own gives consumers the luxury of time. The average rent to own agreement, for instance, is about two years long, and that gives future homeowners two years longer to save a down payment — and hopefully one that is over 20%.
There’s No Need To Pass-Up The Opportunity to Purchase Your Dream Home
Let’s say you want to purchase a particular home, but you cannot quite afford it — at least for a few years. If that’s the case, a rent to own lease is the perfect option for you. True, it “secures” your spot as the buyer (in other words, without such an agreement, someone may — and, in fact, is very likely to — purchase your dream home in the meantime). In some cases, it also gives you the opportunity to lock in a particular sale price, reflecting current market values. Talk to your landlord or property manager about whether such an agreement is available.
If you want to purchase your dream home within the next few years, it is very much worthwhile to look into answers to the question, “How do rent to own homes work?”
