What does Lease-to-Own mean?

Lease-to-own or also known as, Rent-to-own can be a great alternative if you can't afford to buy a home outright, have a low credit score or don't have enough money for a down payment. Rent-to-own contracts can also give you the chance to see how you like a home and neighborhood without committing to buying it. Read on to better understand what rent-to-own means, how the process works and what you should know if you're interested.

What does rent-to-own mean?

Simply put, rent-to-own is where you rent a home for a certain period of time before you buy it. Depending on the terms of the contract, that period can range from several months to several years. These contracts are different from a traditional renter's lease or purchase contract.

As part of your rent-to-own contract, the seller agrees to put a certain amount of money from your monthly rent payment toward your equity in the home.

There are two kinds of rent-to-own contracts: lease-purchase and lease option. With a lease option contract, you have the option to purchase the home after a time period you and the property owner have agreed upon. With a lease-purchase contract, you're legally obligated to buy the home at the end of that period.

You’ll be required to put down about 5-10% as a commitment fee to go toward the purchase price and be able to finance within the agreed time frame. Credit score and Debt to income ratio are not required to qualify.

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The benefits of lease to own:

• You get to take over the house
• Can renovate home to your liking
• No increase rent (unless property tax goes up)
• All terms are upfront and transparent
• There is already a set price to purchase in the future
• Live with reassurance that your landlord will not kick you out for no reason
• Monthly credit back
• No limit to how many people live in the house

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Lease to own is a great opportunity for those who can’t get financing from the bank to buy a house yet and those who want a nice house but don’t want to pay the high interest rate now and need to buy some time until the rate is lower in the future.

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Why rent to own?

• Flexible Homeownership: Enjoy the flexibility of living in your chosen home while gradually transitioning to full homeownership.
• Credit Improvement: The rent-to-own arrangement provides you the opportunity to improve your credit scores, making homeownership more accessible in the future.
• Lock in Purchase Price: Secure the current home's purchase price, protecting yourself from potential market fluctuations.
• Test Drive the Home: Experience life in the home before committing to the purchase, ensuring it truly meets your needs and preferences.
• Personalization: Customize and personalize the property during the rental period, making it feel truly like home.
• Responsibility and Pride: Encourage a sense of responsibility and pride in the property, fostering a strong connection to the community.

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If this sounds like a perfect fit for you, or if you would like to know if this is the right option for you, book a free consultation with us to further discuss.

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