Often, buyers decide to purchase a perfect house, but the main issue comes when they don’t know which type of financial option to select. The people will face no confusion when they are buying a house through an average buying scheme. The individuals who have chosen to rent to own homes have only a few choices.
Why is Lease Option Best for Rent to Own Homes?
Buyers will find that one financing option seems the best, which is the lease option. The reasons for selecting a lease option for the rent to buy homes will be discussed in the below-mentioned points. The following topics will be addressed the meaning and process of lease options, advantages, elements of the agreement, mistakes not to make, and comparison with other financing options.
Perceiving Meaning of A Lease Option
First of all, you have to understand the process of rent to own homes in which the buyer lives in the house for a specific rental period. At the end of the duration, the closing cost is given to own the property. If you are choosing a lease option, then the rental and purchase are part of the agreement. The buyers choose to either pay the final amount and own the house or leave the deal.
Components of A Lease Option Agreement
When a lease option agreement is made, it should be ensured that the following components are added.
- The house’s total price will be paid at the end of the rental period; when you pay the closing cost.
- The time duration of the whole rent to buy own period. The years in which the purchase price of the property will be paid.
- An advance amount was paid initially. This becomes a part of the down payment when you finally purchase the property.
Extra Clause Included in Agreement
The extra clauses that buyers and sellers can add to the lease option agreement include;
- Information regarding the lease payment, including due date, the penalty for late payment, and the lease agreement period, is mentioned in the agreement.
- Permission to have pets, allow roommates, and change the house are also discussed and added.
- The maintenance responsibilities are written; so that there is no confusion.
Advantages of Lease Option
Experts like Stop Renting Albany suggest selecting a lease option agreement to buy the rent to own properties because it gives the following advantages;
- The buyers choose to pay the closing cost and own the property, or they can leave the deal.
- You can grab the deal today and buy it at a later stage.
- You can qualify for the purchase even if you have a bad credit score.
Errors not to Make
Some mistakes can be bad for the lease option. The following errors are the most important to mention;
- The lease agreement is not made in both parties’ presence or when the lawyers are not present.
- The contract is not read and checked by the seller and buyer.
- The agreement is missing important clauses and components that are discussed in the above points.
Comparing Lease Option with Lease-Purchase Agreement
There is another financing option for rent to own homes, which is the lease-purchase agreement. The main issue of buying a house through a lease-purchase agreement is that it becomes obligatory for the buyer to buy it after the rental period. This compulsion is a problem because some buyers are not willing to finalize the deal.
Looking at all of the points mentioned above, it is clear that selecting a lease option agreement and the buyers have many advantages. So it is a good idea to buy rent to own homes through a lease option agreement.
Frequently Asked Questions
Are rent-to-own home offers legitimate?
One of the main reasons people think renting to own homes is that many lenders don’t require a high credit score. Also, the buyers choose to leave the deal, which makes this agreement doubtful, and people think renting to buy homes is illegitimate. But in reality, these two reasons are the advantages that people are attracted to. The rent to own home offers are legit and becoming more and more popular with each passing year.
Should I buy a house or rent a house?
The most favourable choice is to buy a house because you escape the rent you have to pay each month and it increases every year. A thing to focus on is that you should have the finances arranged. There is a great option that enables you to live in the house on rent for a specific period and then chooses to buy the house of leaving the offer. This agreement is called rent to own homes.
Do you rent or own your house?
It might come to you as a surprise that you can rent the same house that you plan to buy. Yes, this is true because renting to own homes enables you to rent the house and then purchase it by paying a closing cost.