The Particulars Behind A Rent-to-Own/Lease Option For Your Home By Michael E Taylor At Isnare.com Ezine Articles

It seems that the American Dream consists of the ability to buy and afford your own home. People across the country work and strive to make that dream become a reality everyday. Unfortunately, in today’s economy and mortgage crisis it has become increasingly difficult for many people to fulfill that dream.

Problems with credit, financing and the job market have made many people place their ideas of home ownership in a state of limbo, waiting to see what happens next in the economy. However, there are many nuances in the realm of mortgages and home loans and it is important that any potential homeowner know all the options that could be available to them.

Rent-to-Own Option Could Be Stepping Stone for Homeownership

There has been a shift in the mortgage industry in recent months and credit markets have tightened. The mass of people that were both solicited and victimized by the sub-prime market are all people who more than likely would not qualify for a home today.

A Rent-to-Own option is for those people who do not qualify for a loan because of bad credit or finances and allows them a certain period of time to essentially “bet on themselves.” This method of working your way towards homeownership is one that is good for many people, but also carries some level of risk.

The details of Rent-to-Own agreements center on the idea that a person who participates in this will rent a home for a period of time. At the end of that time period, the occupant is given the option to buy the home. When a person enters into this agreement they typically pay an option fee, which can be anywhere from one to five percent of the purchase price of the home, what that allows them to do is exercise the option agreement at the end of the rental period and that will be put towards the purchase of the home.

Agreement that Allows Home Buyers to Rebuild Credit and Build Equity

Rent-to-Own agreements are typically entered into for a longer period, usually around three to five years. The reason that a potential home buyer would want to rent longer is because they may need time to rebuild their credit, save for the home or shop for a mortgage plan that fits them.

The gamble in this area typically revolves around whether or not the potential buyer and current renter will be able to qualify for a loan at the end of the rental period to purchase the home outright. If they are able to do this, then their option payment goes towards the purchase price. However, if they do not qualify for the loan, they are out both the monthly rent that they have paid as well as the option payment, which will be transferred to the seller.

On the flip side, a Rent-to-Own agreement does have positives. It allows a potential buyer to build equity in a home that they could eventually own through their monthly rent based upon the agreement that they set up with the seller. Plus, it gives people who have made mistakes with their credit in the past a chance at owning their own home.

Rent-to-Own agreements have positives and minuses; make sure you consult with a real estate or mortgage professional to determine if one is right for you.

Published At: Isnare Free Articles Directory http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=420240&ca=Real+Estate

Important Notice DISCLAIMER: All information, content, and data in this article are sole opinions and/or findings of the individual user or organization that registered and submitted this article at Isnare.com without any fee. The article is strictly for educational or entertainment purposes only and should not be used in any way, implemented or applied without consultation from a professional. We at Isnare.com do not, in anyway, contribute or include our own findings, facts and opinions in any articles presented in this site. Publishing this article does not constitute Isnare.com's support or sponsorship for this article. Isnare.com is an article publishing service. Please read our Terms of Service for more information.