| For many Americans today the dream of home | | | | For example, take a home worth $300,000 with a |
| ownership seems out of reach. Prices have | | | | monthly mortgage payment of $2,200. The |
| skyrocketed over the last few years, and right | | | | owner needs to sell it, but there are several |
| now it's nearly impossible to get into a home | | | | others in his area that are also for sale, a few |
| without good credit and mega bucks for a down | | | | perhaps listed at even lower prices than his. The |
| payment. | | | | home seller decides that he wants to sell to a |
| This can be discouraging, especially to those with | | | | rent to own buyer so that he can get the home |
| larger families or small children. Having too little | | | | sold quickly and for the price he needs. |
| room and no back yard, and hearing the neighbors | | | | The seller may offer the house at $295,000 with |
| through the thin walls of an apartment building is | | | | a monthly payment of $2,400 and a 3% Option |
| not what most of us want for our brood. | | | | Consideration (which is money or "down payment" |
| However, in recent years an increasingly popular | | | | giving the buyer the Option to purchase the home |
| and mutually beneficial option has emerged for | | | | in a pre-determined amount of time at a pre-set |
| people facing these or other related home-buying | | | | price). Most times this Option Consideration is |
| issues. The process is termed "how to buy a rent | | | | non-refundable even if the buyer is unable to |
| to own house" (which is similar to a Lease Option) | | | | purchase the house. |
| and it can be a viable solution for anyone who | | | | In this example, the rent to own buyer will bring |
| finds themselves with limited down payment | | | | the 3% Option Consideration to the seller (before |
| money, income, or credit. It can allow an aspiring | | | | move in) and begin paying the rent. They will have |
| homeowner to get into a house before they have | | | | already agreed upon the price of $295,000 (which |
| completely fixed all of their credit problems, and | | | | can't increase even if the value of the home |
| with less money out of their pocket. | | | | does), and they will have agreed that the buyer |
| Even more encouraging is that the rent to own | | | | will have a pre-determined amount of time to |
| house buying process doesn't usually involve | | | | exercise their "Option to Buy"- for example, 2 |
| getting qualified by a Loan Broker or a bank | | | | years. |
| before moving into the house. Because the Seller | | | | It may also be agreed upon by the Buyer and |
| is a real person with a real need to sell their | | | | Seller that $600 of the $2,400 monthly rent will |
| house, they are typically more flexible and willing | | | | be considered "Rent Credit" and applied toward a |
| to work with a buyer than a financial institution | | | | down payment. This Rent Credit money will be |
| would be. And depending on the situation, the | | | | used when the rent to own buyer finally qualifies |
| seller is quite often able to accept a down | | | | for a loan, and officially takes ownership of the |
| payment that is considerably less than a bank | | | | house. (Within the agreed upon 2 years) |
| would require. These pluses are very appealing to | | | | This is a simple example, and terms are negotiable |
| many Americans who have been unable to keep | | | | in transactions such as this, but this scenario is |
| pace with high housing costs, or who have had | | | | common and was used to help clarify some of |
| events which have temporarily lowered their | | | | the elements of the process. |
| credit score. | | | | This creative process of how to buy a rent to |
| In exchange for these advantages, the buyer of | | | | own house is becoming more and more popular |
| a rent to own house needs to be flexible in other | | | | because it creates a "Win - Win" scenario. The |
| ways. Usually this type of buyer is expected to | | | | Buyer is able to get into a home with limited |
| pay close to (or even slightly above) market | | | | money and credit, and the Seller is able to get a |
| value for the house and the may also pay | | | | fair price for their home and get it sold more |
| above-market rental prices. This is because of 2 | | | | quickly. Both sides are better off than before, and |
| things: | | | | the process meets all of their needs. In today's |
| 1) The home seller usually needs above-market | | | | tumultuous market this tried and true method is |
| rents to help cover his mortgage. | | | | allowing many Americans to buy and sell homes |
| 2) The home seller will often give "Rent Credit" to | | | | that they wouldn't have been able to through |
| the potential buyer in exchange for a higher | | | | more "conventional" methods. |
| monthly rent. | | | | |