Buying and owning a home is a wonderful part of life, but it's not a simple process. It requires money, good credit, and hard work. The average person puts 13.6% of the home's purchase price as the down payment.
Coming up with that much money is challenging, which is why many people turn to rent-to-own homes. Renting to own is an alternative way to own a house, but you must understand how it works before pursuing it.
Here is a guide to help you understand how rent-to-own homes work in Layton, UT.
How Rent-to-Own Homes Work
When you purchase a rent-to-own home, it provides a way to buy a house without going through the loan process with a lender. Instead, you work out an arrangement with a homeowner.
The homeowner agrees to sell you a house through renting. You must usually put some money down and pay monthly rental payments. Part of the payments go toward the home's purchase price, while the rest is for rent.
You must also sign a contract which outlines the details. These are called rent-to-own agreements.
For example, you will typically have to pay for all the repairs and maintenance. You may also have to pay property taxes, home insurance, and HOA fees.
Afterward, you lease-to-own the house for a set number of years. This might be five years or longer. At that point, you must get a home loan to purchase the home traditionally.
Advantages of Rent-to-Own in Layton
Buying a rent-to-own property provides benefits, the first of which is you can own a home without qualifying for a home loan. This opportunity gives you time to save up more money and work on your credit.
When you reach the end of the rent-to-own contract, you will hopefully qualify for a home loan.
Renting to own also gives you the chance to try out the house to see if you like it. If you don't like the home, you can void the contract and move out. You will lose some money, but at least you have a way out.
Challenges and Considerations
Around 31.7% of the U.S. population rents. Many people rent because they cannot afford to buy a house. Renting to own gives you the ability to buy a house while renting, making it easier for many people to own a home.
One thing to consider is the potential for losing money. If you fail to make your payments, the homeowner can void the contract and evict you.
This process would cause you to lose your down payment and the money you paid toward the home's purchase. You might also incur other bills you weren't expecting, such as home repairs.
Looking at current real estate trends might help you decide if renting to own is the right option for you.
Consider a Rent-to-Own Home
Rent-to-own homes offer a way to take part in homeownership before a bank will give you a loan. Buying a home this way incentivizes you to work hard on your credit and finances, as owning a house motivates you.
PMI Home Team specializes in property management in Northern Utah. With over 20 years of experience, we have what it takes to help you with purchasing a home or managing rental properties.
Get in touch with us today to learn more!
