One way that modern homebuyers sometimes get the homes that they want is by agreeing to a rent-to-own contract. This is different than simply buying a home or renting it, combining elements of both and making for a more complex system.
If you’re thinking about using this setup, there are a few things you want to know first. It’s very important to understand exactly what you are agreeing to.
Don’t overlook these important factors
You certainly want to look into the specific contract in your unique situation, but below are five important factors that you may want to keep in mind:
- There is no guarantee that the money you pay in rent will be applied to the total you need to pay to buy the house, though this is done in some cases.
- You may have to make repairs and do maintenance on your own, rather than relying on the landlord.
- The rental period will typically be defined in advance, and then you have the option to purchase the house prior to the expiration of that lease. If it expires, the landlord can rent it to someone else.
- You will have to sign a lease agreement for the time that you are renting the home, which may come with its own stipulations.
- There are two typical types of contracts that are used. The first is a lease-purchase contract, which says that you have to buy the home when the lease is up. The other is a lease-option contract, and it says that you can make the choice to buy the house if you’d like to do so.
There are benefits to doing this, but there are also complications. Take the time to carefully look into all of your legal rights and understand exactly what steps to take.