In this article, we focus solely on the version that involves lease with an “option” to purchase. There is an alternate version of rent-to-own which involves a lease-purchase agreement, in which the tenant is contractually obligated to buy the home. Rent-to-own programs also allow tenants to build up credits or options that can be applied towards the purchase of the home they are renting. The agreement will clearly lay out the monthly lease payment, the future purchase price of the home, allowed time of purchase, and any special terms. As the tenant, you have the first right to purchase the home during the term of the lease. When entering into a rent-to-own agreement, the owner agrees to not place the home on the market to be sold. Rent-to-own is the process in which you lease a home with an option to purchase it in the future. More importantly, it enables wealth-building while postponing taking on additional debt in the form of a mortgage. Done correctly, rent-to-own allows you to ease into homeownership without having to lock away all your savings at any one point in time. The financial burden and pressure of purchasing a home are enormous. When the upfront downpayment requirements are very high, rent-to-own homes are an excellent alternative to access homeownership. Many people who are interested in becoming homeowners aren’t financially prepared to take on a mortgage. This week, let’s take a deeper look at one of the options, rent-to-own homes - how it works, the pros, and the cons. Last week, we discussed the different ways in which millennials are becoming homeowners.
For many, homeownership is a life-long dream that, at times, may seem impossible to achieve.