A lot of options are available when it comes to property acquiring. A rent-to-home agreement is one of the best options one can opt for. Rent to own home is a replacement to the traditional method of buying homes but the buyer does not have complete ownership of this type of home. There are a lot of pros and cons of rent to own homes, but before that, you must understand what does rent to own mean?
A Rent to own home is a deal or an agreement, where a person who is staying at a rented home will buy and get complete ownership before the lease expires. They stay paying the rent for a particular time as mentioned in the contract. It is also known as rent-to-buy or rental purchase as well. Here the rent payments, which are paid before the expiration of the lease are considered a down payment. But, is rent to own a good idea? With the help of this article, you will get a clear picture of the merits and demerits of rent to own homes.
Rent to own advantages:
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Available even with a bad credit score
People or renters are attracted to rent to own deals because it is available to them despite a low credit score. There is a high chance of this rating to be improved when the person rents the house or take a loan to buy the property.
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Gets enough time to test and evaluate the property
Staying in a property before actually considering to buy it, let one evaluate and decide the merits and demerits of the same. So, with a rent to own agreement, you might be able to judge if it is a wise decision to invest a huge amount in the property or not.
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The deal is at a fixed price even when there is a rise in the market
At the time of making the lease, a fixed rate is decided between the buyer and seller. So, before the lease expires, the buyer can get the house at the pre-decided rate, no matter what the current rate is going on in the market.
There might be many merits of rent to own house agreement but everything comes with a demerit as well.
Disadvantages of rent to own house:
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A high chance of the money getting forfeited
After staying in the house for certain years, then decided to not buy the property once the lease expires, the rent paid which was to be considered as downpayment gets forfeited.
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Non-negotiable even when the price in the market depreciates
There is no loss when the current price in the market is higher at the time of making the rent to own house agreement. But there might be a high chance, that the market price reduces. In this scenario, the price mentioned in the agreement will be considered.
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An expensive option
The downpayment and monthly interest are very higher in this case. But, it all goes vain and it’s a huge loss when not buying it in the future.
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Limited ownership
The control is very limited when you rent the house. It is the landlord who takes all the decisions related to the home you might buy in the future. Even the renovations have to be done keeping in mind the contract.
So, when opting for a rent-to-own home agreement, it is better to evaluate the above-mentioned points. This contract should be chosen only if the property is worth the risk.
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