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Rent to Own Homes: Benefits and Risks

by Marquette Turner Luxury Homes

in Features, Real Estate Radar, Rental, Variety

If you are planning to buy your own house but don’t want to rely on a mortgage, then you have stumbled on the right blog. With the good-old mortgage route, you can buy a house only if you have a decent credit score and a fat cheque for the down payment. If you have a poor credit score, you will face complications getting the mortgage, and there will be no guarantees that it will be improved. Luckily, there are other ways out there through which you can buy a house without worrying much about the down payment or credit score. One of these options includes a rent-to-own agreement in which you rent a house with the option of buying it before its lease expires. With a lease option contract, you have enough time on your hands to decide whether you want the property or not. Rent-to-own contracts have many benefits, but they also have a few drawbacks. If in the US, you can also visit renttoownreviews.com/rent-credits to learn more about rent-to-own homes and rent credits. In this article, I have mentioned some of the benefits and risks of rent-to-own homes that will assist in making a decision.

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Benefits of Rent-to-Own Agreements

Credit Score

One of the main benefits of rent-to-own homes is that you don’t necessarily have to show a good credit score to rent the property. If you have a bad credit history that doesn’t allow you to purchase a house, you can simply rent it and can improve your credit score later to get a loan for it. This is one of the main reasons why many people opt for rent-to-own agreements as it gives them a chance to own property even with bad credit.

Fixed Price

Most people sign rent-to-own contracts that last for 2 to 3 years, and in that time-period market can change dramatically. We have seen in the past that the real estate market’s price increases with time. It is very rare for the market to go in the opposite direction, and we don’t see the price falling often. With a rent-to-own agreement, you would never have to worry about the price because the owner can only charge you the price already fixed in the agreement.

Testing

It is not often that you get to test a house before purchasing it, but with a rent-to-own agreement, that is also possible. This lease agreement provides you the perfect opportunity to test the property yourself before actually buying it. You can live in the house for a year or two and can decide if the town is suitable for you or not.

Risks of Rent-to-Own Agreements

Money down the Drain

This is something that happens when you decide not to buy the property. When you sign a rent-to-own agreement, you are putting a lot on the line. The rent money you are paying can help you get the property in the future, but you will have plenty to lose if your financial situation changes. You must also keep in mind that you can lose the option of purchasing the property if you miss the payment or pay it too late.

Limited Control over Property

During the period you are renting the property, you have limited control over it. A rent-to-own agreement doesn’t give you the right to make decisions for the property. If you want to make certain changes to the house, you will need the owner’s permission. This can be frustrating because even if you plan to purchase the house after the agreement, you still cannot modify it according to your liking. You will be given owner control only after the completion of the agreement. However, before that, you will only have the rights a tenant has.

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