So, you’re curious about how the rent to own process works. You’re not alone–countless others are ready to embark on their journey to homeownership but, due to any number of circumstances, they’re unable to do so. The good news is there are alternative ways to own a house, and pursuing a rent to own homes nyc arrangement is a great way to do it.
What Does it Mean to Rent to Own?
This form of rental arrangement gives the tenant the option to buy the property they’re renting after a certain period. In such cases, the monthly rent is often inflated to include money towards the down payment. One of the primary benefits of rent to own is it helps build the tenant’s credit score and helps them save money towards a down payment, both of which are often obstacles to homeownership in the first place.
Why Homeowners Offer the Rent to Own Option
Rent to own arrangements are not as common as rent or sale listings. A homeowner may offer this arrangement if:
- The homeowner is having trouble selling their home (it’s been on the market for a while); or
- The current tenant expresses an interest in buying it from the homeowner.
How the Process Works
Finding the Rent to Own House
The process starts with finding the right property. Therefore, prospective buyers must figure out what they want out of their future homes. The best approach for finding a rent to own home is through a realtor. He or she will know approximately how many listed homes offer this type of arrangement and where they are located.
Negotiating the Agreement
Once you find a property that you like, it’s time to negotiate the terms of the agreement. It is highly recommended to hire a real estate attorney who has experience with rent to own contracts. A good real estate attorney will work with you to ensure the contract includes the appropriate language and properly outlines the terms towards ownership, including what percentage of the monthly rent will be applied to the down payment and the number of lease renewals allowed within the rent to own period. Nyrentownsell will help to find very affordable apartments.
Sign the Agreement
Once an agreement is made, it is time to move on to signing the agreement. You can expect to pay an option fee upfront, which typically equals 3% – 7% of the home’s market value. These funds will be placed in an escrow account and will be applied to the down payment towards the end of the lease term. However, prospective buyers must know that they may lose the option fee if they choose not to buy the property at the end of the lease.
Sometimes, owners subject the rent to own option to timely rent payments. Tenants must be aware of this and be careful to pay all rent payments on time or risk losing the option to buy the property.
The Bottom Line
Remember that during the lease term, the house is still the homeowner’s property, so be mindful of what’s allowable by way of cosmetic upgrades, repairs, and maintenance pursuant to the lease agreement. Similarly, ensure that the lease agreement identifies what the tenant and the homeowner are responsible for during the rental period.