What You Need to Know About Rent to Own Homes

Possessing a home is a desire for most people. Purchasing a home requires a lot of money. If you have more credit card debt or other reasons you will not qualify to get a mortgage loan. The rent to own homes is the best solution. If you consider a rent to own homes in Florida, you should know the following things

How the monthly rate and final selling price relate.

If the rent to own contract, you will be needed to pay more rent each month to the homeowner. The extra cash goes towards minimizing the final sales for the property you want. After some years pass, you get the option of purchasing the houses where the sales house will be lowered by the extra cash you have paid. Before you agree on the rent to own arrangements, ensure that you are comfortable with the final sales price of the property, as well as the monthly rent payment.

Timeline

When beginning the rent to own process, the potential buyer and the seller are needed to sign a contract. They should list what will be the sales price of the home and how long the buyer will rent the property.  The document should also state the amount of money the rent should pay each month and the specific amount that will go towards reducing the final sales price of the home.

Option premium

After the potential buyer, and seller signs the contract, the buyers needed to pay an option premium. The premium provides the right for buying the home when the rental period ends. The buyer should know that the premium is non-refundable even when you choose not to buy the house after the close of the rental period. The renter should pay around 5% of the sales price of the property as an option premium.

Extra money

When you decide not to purchase the property after the end period of the rent to own, you will lose the extra money that you have paid on every month.  Most sellers include a provision in their contacts and state that the renter will lose the extra cash they paid each month. Therefore, when you are not sure that you will purchase the home, you should not enter the rent to own arrangement. This will help to prevent losing extra dollars on every month.

Consider the real estate market

You need to study the market that the rent to own home lies. Check if the housing price will raise its value every year. You should also check of the market is a sluggish one. This is crucial since the home can either increase or lose the value after the five years of renting. If the home loses its value, check if you could still be willing to pay the higher final sales on the house which you have negotiated with the landlord. Therefore, when you are negotiating the future sales price of the home, you should be careful. This is because the seller can demand high pricing for a specific market.  You can seek help from a real estate agent to help you study the local housing market.