There is more than one way to own a home. Unless you are a lottery winner, you don't usually pay for the home in full upon purchase. Most of the time, homeowners choose to have a mortgage. This works by giving a down payment which is a certain percentage of the full value of the property. Then, you pay regular installments over a period of time until the full amount is paid.
To qualify for mortgage, you will need a good credit score and cash available for the down payment. However all is not lost if you do not have a good credit score, or enough money for a payment. There is a third option to purchase a home. This is what we call a rent-to-own agreement. Know more about rent-to-own agreements below.
What is rent-to-own?
It is an agreement where you agree with the vendor to rent the home for a certain amount of time. After, you may exercise an option to purchase the home when the lease expires.
What are the different elements in a rent-to-own agreement?
It is important to take note of the details of the contract. There are many elements you should watch out for to check if the contract is beneficial for you. Here are some of them:
Option Consideration Fee – This is a one-time payment that gives the buyer the right to buy the property in the future. Depending on the agreement, you may or may not be obliged to purchase the property in the future. The rate differs for each contract. It is important to seek a rate that is fair for you.
Purchase Price –The contract will dictate when and how the property will be purchased. There can be an agreed upon price when the contract is made or it will be computed at a later date.
Rent – The contract will state the duration and amount to be paid for rent. There may be agreements where a percentage of the rent will be applied to the purchase price. Seek out what is a fair amount and duration for the rent.
Maintenance – It will be agreed upon the contract who will be in charge of maintenance during the renting period. Paying for the repairs, association dues, taxes, and other related expenses should be clearly stated.
Don't let poor credit scores or lack of immediate funds stop you from buying your dream home. What's important is you study all your options. Weigh the risks for each. And no matter which option you use to purchase your home, choose what best fits you. The same is true when choosing your insurance.
At Brad Spurgeon Insurance Agency Inc., we take pride in making sure that our clients are well-protected at prices they can afford. To learn more about how we can help you, please contact our agency at (409) 945-4746 or Click Here to request a free quote.
What is rent-to-own?
It is an agreement where you agree with the vendor to rent the home for a certain amount of time. After, you may exercise an option to purchase the home when the lease expires.
What are the different elements in a rent-to-own agreement?
It is important to take note of the details of the contract. There are many elements you should watch out for to check if the contract is beneficial for you. Here are some of them:
Option Consideration Fee – This is a one-time payment that gives the buyer the right to buy the property in the future. Depending on the agreement, you may or may not be obliged to purchase the property in the future. The rate differs for each contract. It is important to seek a rate that is fair for you.
Purchase Price –The contract will dictate when and how the property will be purchased. There can be an agreed upon price when the contract is made or it will be computed at a later date.
Rent – The contract will state the duration and amount to be paid for rent. There may be agreements where a percentage of the rent will be applied to the purchase price. Seek out what is a fair amount and duration for the rent.
Maintenance – It will be agreed upon the contract who will be in charge of maintenance during the renting period. Paying for the repairs, association dues, taxes, and other related expenses should be clearly stated.
Don't let poor credit scores or lack of immediate funds stop you from buying your dream home. What's important is you study all your options. Weigh the risks for each. And no matter which option you use to purchase your home, choose what best fits you. The same is true when choosing your insurance.
At Brad Spurgeon Insurance Agency Inc., we take pride in making sure that our clients are well-protected at prices they can afford. To learn more about how we can help you, please contact our agency at (409) 945-4746 or Click Here to request a free quote.