About Rent-to-Own Homes

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Rent-to-own homes allow renters the option to purchase the house during a set period of time, often with rent money going towards the down payment of the home. Learn about the benefits of a rent-to-own home in a soft real estate market with tips from a mortgage specialist in this free video on real estate.

Part of the Video Series: Real Estate Financing
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Video Transcript

Hi my name is Stetson Lowe and in this clip we're going to be talking about rent to own homes. Often times you'll be driving around and you may see a sign in a front yard that says rent to own or lease to own. This is a home that is up for rent or for lease with the end result for the seller wanting it to actually be to sell it to you or the person renting the home. There are many advantages to this in a soft market you may be able to rent the home and setup a period of 1 to 5 years where you rent the home with the option to purchase it anytime during that time. In a soft market if property values go down, you're not obligated to buy the home so you haven't lost any money. Whereas in a long market or a great market, if the property values gone up, you've already agreed in writing to buy this home for a set price or you have the option to buy it for a set price pre-established so then you'd have built-in equity. Another benefit of a rent to own situation is that a portion of your rent each month typically goes towards the purchase price or the down payment that you would have to come up with when you go to finance the home or exercise your lease option. So there's many advantages to a least option. If you have bad credit and can't qualify for a home, I would highly recommend a lease option or a rent to own situation on a home.

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