Being stuck in the rental cycle is no fun at all. Why is it then that thousands of families around the world face the same issue day in day out, being trapped in the rental cycle? This article is going to discuss the benefits of renting to own your own home and the basics of how it works.
Renting to own a house or condo is really not that different to renting to own a fridge or television set. You get the enjoyment and the use of the asset with the option to buy that asset at the end of the agreed term. The only key difference between rent to own with property and rent to own with household appliances is the price tag and the term of the rent to own contract. The benefits to both the buyer and the seller are enormous. The downsides are minimal.
When a home buyer has bad or spotty credit records can really make it difficult when you are in the beginning stages and you generally face negative feedback with banks and other lending institution. It’s a sad fact that if you don’t fit into the lending category of these banks that you will generally be rejected for financing by these institutions, simply because your credit is not what they class as safe.
So what can you do if the mortgage lenders will not support you to fund your purchase? Find someone who already has finance in place, and needs to sell a home that they no longer want or need. This is by far the most overlooked market around the world. There are thousands of properties around the world every year that are simply not selling. It may be that the vendors want the top price and won’t budge on their price. It could be that they have very little equity available. Whatever the reason is, you can become a dream come true to these vendors.
One of the biggest problems that vendors have when they get stuck with a house that they don’t need or want, is that they have ongoing monthly payments they must be maintained, or their bank will foreclose. No property owner wants this to happen, and when they are stuck between sitting on a home that has debt to be maintained, and needing to move, it can become very distressing for them. The rent to own solution fixes these issues for the vendor, because the new home buyer has the income to support the monthly payments and is happy to purchase over a period of time. This helps improve the purchasers credit score over time, and helps the owner to move on without any worries about how the monthly payments will be met.
Rent to own homes generally have a lease agreement between the vendor and the new buyer and they have another legal document called a Call Option. The Call Option gives the new buyer the right, but not the obligation to purchase the home after an agreed period of time. During this time, the purchaser pay’s an agree amount of money to the owner of the home, so that the monthly outgoings can be maintained. The new buyer normally makes cosmetic changes to the home and maintains the house so that they can build up value over the term of the agreement.
At the end of the Call Option period, the purchaser can choose to either buy the house or simply walk away if they change their mind. If the tenant/buyers move forward and purchase the home, they have achieved what they would not have been able to do while having poor credit and the owner has the stress of paying for an unwanted property removed. Of course, if the new buyers choose to walk away at the end, the existing seller can either resell the property which has probably gone up in value, or they could even set up another rent to own home deal. The choice are endless and work really well for both the vendor and purchaser.
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