Rent To Own Process Step By Step
Related Forms: Rent To Own Template.
Looking into the rent to home process?
Are you looking into the rent to own process? This is a scheme created to aid those with either a poor credit history, or no credit history at all. The lease involved in the rent to own process is different in that the buyer is not required to get a mortgage at the very beginning of the deal. The buyer will, however, be obliged to find a way to finance the balance of the property’s sale price at the completion of the rental option term – if, of course, he/she does not have the resources to pay the finances in full at the time.
History of the rent to home process
The rent to own process was originally thought up to be used by sellers to dispose of the property as quickly and as conveniently as possible. Depending on the individual circumstance, the seller may need income from the rental because of a new home purchase or a job related move.
A large part of why the rent to home process was developed is because a difficult economic market is normally what prevents buyers from getting financing for a property. Essentially, what the rent to own option does for buyers is that it allows them to get a property without having to take out any mortgage whatsoever.
The current real estate market can put buyers off entirely. The rent to own process is used by sellers to attract more attention to a property. In addition, the rent to own process thins out the truly potential buyers from the time wasters.
Sellers use this process to make a property more attractive and appealing to a buyer – and, most of the time, this plan works incredibly well. The entire process is normally less expensive for both parties involved! It is also more easily carried out – with less involvement from financial institutions.
Function of the rent to own process
What happens in the rent to own process? Both the seller and the buyer draw up an agreement. While some choose to use an attorney in this process, it is not necessary. The contract signed generally has key information to the agreement – but, most importantly, it states exactly what the monthly payments will be. In addition, the contract will have a time limit listed whereby the buyer should have the repayments completed (a typical period would be three years.) After this time limit, the renter has an option of purchasing the property.
When this time comes around, the stated price of the property will already have been agreed upon on the initial contract. The price agreed upon at this point cannot be changed or negotiated upon afterwards. This is why it is very important you understand exactly what you are signing when you sign a contract for the rent to own process.
The price of the property can only be altered if the seller agrees, which is rare. The sale price sticks to what was originally signed upon regardless of how property value may have increased or decreased in the meantime.
Misconceptions of the rent to own process
Many people jump into the rent to own process thinking that it is not legally binding. However, it is, although renters can still walk away if the particular property has significant problems. If the renter does this, however, he/she will lose the option fee portion of the monthly repayment.
Despite common misconception, the renter may also have to put a down payment on the property before signing
the contract; depending on the individual circumstance. If the renter does have to make this payment, it typically equates to 1% value of the property’s sale price.
Is the rent to own process for you?
The rent to own process can be used in many situations. Most commonly, this process is used by individuals who do not intend upon staying in a particular property for an extended period. For instance, people renting may only be staying in a property during the period of a short term job contract, or for a few months for personal reasons. In these situations, the rent to own process is extremely beneficial.
The rent to own process is also useful for those who do not have the money to get a typical mortgage. This process is also beneficial for those who do not wish to take out a mortgage for a particular reason. For various reasons, buyers/renters may have bad credit history. In this instance, the rent to own process is for you.
Does this sound like you? Consider the rent to own process today from reading this step to step guide.
Related Forms: Rent To Own Template.