What you should Know about Lease to Own Contracts

For many people living in rental homes, their goal is to be able to buy a home of their own at some point. This however remains a pipe dream because  just when they think they have what it takes, something happens and the money they have saved is diverted. This of course is very frustrated and makes life  hard.


In the current financial market, only  those who have huge salaries from a regular job stand the chance of getting financing from a bank to be able to buy a home. Without the financial assistance, it is  virtually impossible to save all the money up front. This simply means that a lot of people have given up on home ownership and this is where ideas such as rent to  own come in as alternative solutions.



Rent to own refers to a special kind of a lease made between a home owner and a potential buyer over a particular property. The buyer  simply rents the home and has the interest to buy it after a couple of years. The two parties agree on the sales price and the monthly rentals to be paid. If a  mortgage is out of reach, this is a great option that benefits both parties while protecting their interests.

As with any other agreements that involve sale of major property, it is a wise thing  to work with lawyers and real estate agents. The contract signed should be very clearly understood by each party to avoid any future problems. Agreements  should only be signed when both parties agree on the terms and each understands their role and the repercussions of breaching the agreement. For this reason  maximum cautions must be exercised.


If do not qualify for a mortgage now, you can begin to prepare your finances in order to qualify  in the future. Meanwhile, you can put down a deposit for a home and continue paying monthly rentals and when you do qualify for a mortgage, you can go ahead  and buy the home. You and the seller must agree on the deposit amount and the monthly rentals. The lease therefore has that clause that allows you to buy the  property after some time.


This time period also gives them the chance to accumulate savings which they can use to buy the said property. Should the potential home buyer chose not to  exercise the purchase option for the property, they forfeit the fees and rent paid that far.  Some lease options may provide a clause that allows the potential buyer  to sell their option to buy, thus recovering some of the money paid in terms of rental and down payment.


Rent to buy leases are becoming more and more popular and are a viable option towards home ownership especially for buyers who are do not qualify for  mortgages.