Rent to Own

Rent to own a condo or home has received a lot of press lately due to the downturn in the real estate market the last couple of years but is still a very viable option for many home or condo buyers.  There are two main reasons why the rent to own program is attractive to many buyers in today's economy.

What is rent to own and what kind of agreements are needed?  Rent to own is in its simplest form is renting a home or condo with the opportunity to purchase at a later date.  The lease to own or lease-option agreement is both a lease that allows you to occupy the home and an option that allows you to purchase the home in the future at an agreed upon price.  The typical agreement may offer a part of the rent to go toward down-payment or closing costs.  For example, $200 a month may be applied toward the down-payment where at the end of the year $2400 has been accumulated towards the purchase.

Lack of a down payment is common today with the credit markets shrinking and the ability to obtain credit getting harder by the day.  Home lenders no longer have the financial products available to write loans they way they did just a few short years ago.  Cash strapped first time home buyers with good credit are finding it much too difficult to find loan products with little or no down payment.  The rent to own a condo or home programs offered by many different real estate companies and other organizations fills the gap between the inability to buy now and waiting for possibly years before a down payment can be saved.  Rent to own programs can be structured several different ways offering condo or home buyers a variety of options to purchase sooner than later.  One of the most popular today is for a portion of the rent to go toward closing costs or down payment.  This makes it easier for the potential buyer to save the much needed down payment because it is already a part of their monthly payment.  The excess in rent goes toward an escrow account that is not tapped until the buyer is ready to purchase.  In other words, a forced savings account where the buyer or seller do not have access to the money until an agreement to purchase is executed.