Rent To Own Homes In Carseland Alberta Canada
How the rent to own homes process works
In a standard home acquisition, The homes sale actually takes place once the offer has been approved, and the payment transaction is completed during the closing process. Since most new home purchasers do not actually have the cash and mortgage is typically used to finance the purchase.
The purchaser has to put down a percentage of the purchase price typically between 5% and 20%. This is called the down payment, the purchaser then pays the lender, most likely a bank in regular payment installments over a period of time until the loan has been fully repaid.
To be excepted and qualify for a mortgage, however, the potential buyer is required to have a good credit score and the down payment mentioned earlier. Without these things in place, a traditional mortgage may not be available for some people. However, this does not mean that it’s the end of your dreams of owning your own home, there is another way: A rent to own homes agreement. When a potential purchaser signs this type of contract, they are agreeing to rent the property for a set amount of time before exercising their legal option to purchase the property when the rental lease expires.
How does a rent to own contract work
While no rent to own contracts are exactly alike, they generally all work in the same fashion. The potential purchaser gets to move into a home immediately, they will have several years to work at improving their credit rating and save for a down payment. The potential purchaser typically rents the property for a set term usually between 1 to 3 years, once this time. Has passed they can purchase the house from the seller. There are terms and conditions, it’s not as simple as merely renting the home for three years and then buying it, everyone must follow the terms set out in the contract.
Rent to own contracts are usually made up of a few sections including:
- Option money
- The purchase price
- The monthly rent
- Maintenance on the property
- Purchasing the property
Be sure to contact one of our professionals today to discuss each of the sections in detail.
Who is an ideal candidate for rent to own homes?
A rent to own agreement can be an excellent option for people who want to purchase a home but are not financially prepared. A rent to own homes agreement will give them the opportunity to get their finances or credit score ready to purchase a home. They do this well “locking in” the purchase price on the home but they would like to own. typically some of the option money or the monthly rent will go towards the purchase price, this means the potential buyer starts building equity.
For a rent to own option to work, the fire has to be prepared and confident that they will be ready to purchase when the rent to own lease term expires. If they are not ready to purchase at the end of the term they will likely lose the option money but they have paid. They will also have paid a premium over typical rent costs for the last year to three years, with nothing to show the end.
The final word on rent to own homes
As discussed throughout this article went to own agreement will allow the potential home purchaser to move into the home immediately well getting their down payment and credit score in order so that they can actually purchase the home in the near future. It’s very important for the potential buyer to read and fully understand the contract so they know exactly what they’re getting into.
A rent to own contract is legally binding and thus comes with lawyer talk which can be extremely hard to understand. Anyone who is taking the rent to own route should hire a real estate lawyer to look over the contract so they fully understand what they’re signing for.Carseland Mossleigh, Cheadle, Gleichen, Blackie, Shepard, Nightingale, Shouldice, Okotoks, Hartell, Forest Lawn