Things You'll Need:
- Home
- Rent to own contract
- Lawyer
- Banker
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Step 1
Understand the rent to own contract. Most of these contracts will have an option to buy the home within three years at a set price. There is a set rent to pay monthly plus an option fee and an additional rental premium, which are credited toward the purchase of the home.
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Step 2
Know the option fee and rental premium. You have to understand the total price that you will be paying monthly for your rent. This means the rent plus the option fee plus the rental premium. Be sure you are able to make these payments before entering into a contract.
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Step 3
Look into the risks involved. If you are not able to purchase the home in the agreed upon time you will lose all the money you have paid. So consider this when you are entering into a rent to own agreement.
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Step 4
Have representation. Be sure you have a lawyer look at the papers before you sign anything. Although you may be able to pay the amounts that are agreed upon, you must be sure that you can also exercise the option in the agreed upon time. A banker should also be involved so he can give you a realistic idea of whether you will be able to get the mortgage in the time you have.
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Step 5
Be aware of the downside. Since you are renting, you are not entitled to the tax write-offs that come from owning a home--you can't deduct the mortgage interest or the taxes of the property--this right is reserved for the homeowner.
