How to Buy or Sell Your Next Home Using “Lease To Own” or “Rent To Own” Options Buyers and sellers are looking for ways to buy and sell their homes in this current real estate market. Lease to own is making this possible without having to obtain bank financing! Unless you have been living under a rock, you are well aware that the mortgage industry is in a mess. Nobody seems to know when things are going to turn around. But the good news is, that most experts agree things will turn around. The question is when. This has presented many opportunities to buyers and sellers that are looking to purchase or sell a home in today's market. Does that sound like a contradiction? Let me explain. Sellers are looking to find ways to sell their homes. They have to do something to get themselves out in front of the glut of homes currently available. This is where the Lease to Own or Rent to Own comes into play. Now this is not a new concept. In fact it tends to resurface each time the housing market is slow or a home isn't getting enough action. Knowledgeable sellers often use this strategy to sell their home quickly. By offering this as an option to potential buyers, the seller sets themselves apart from the competition in their market area, as it opens up more potential buyers. So what is Rent To Own or Lease To Own? It is a real estate term that describes a transaction that allows a buyer to lease the home until they are able to obtain financing in the future. There are two parts to a typical transaction. The first is the "Lease for Lease purchase". This is where all terms are spelled out for the tenant/buyer during the initial lease period. You can expect to find things like monthly payment, deposit, and the identity of the property. This is much like any rental or lease agreement you would see. The second part is the "Lease/Purchase". This is what spells out the terms of the purchase agreement. You can expect to find things like the purchase price, closing date, and all relevant items pertaining to the sale. The key factor is that these two agreements both reference each other making it a "Lease/Purchase" or" Rent To Own". There are many advantages to the buyers' of Rent To Own homes also. The sales price is usually agreed upon up front so there are no surprises when you get ready to close. Furthermore, as the home value increases, the sales price remains the same, which allows the tenant/ buyer to accumulate equity. If you secure the sales price while prices are low, you gain that much more potential equity later. The tenant/buyer is able begin working on their credit after they move into the home. This is a HUGE advantage since you may need to move into a home to get your children into a particular school district, move from a less than desirable (or safe) area, or upsizing/downsizing. A common misconception people have is that "you must have bad credit if you need to rent to own". This is entirely inaccurate. Yes, sometimes credit is a factor in determining the need for such a method to buy a home. However there are many other reasons why Rent To Own homes are being utilized now more than ever. Let's look at some of them now. First, many people are forced to relocate to another area (think job, or military), and are unable to obtain financing until they sell their other home. Second, first time home buyers may need additional time to save for their down payment. Next, with the job situation as it currently is, it is not uncommon for a buyer to need additional time on their new job to adhere to lending requirements. So as you can see, poor credit is not the only reason people seek to buy homes with Lease to Own or Rent To Own terms.
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