How Does Rent to Own Work?

Buying a home is a dream for many, but achieving that dream is easier said than done for most people. Something that helps a lot of people reach their goal of homeownership is rent-to-own home options.

But how does a rent-to-own home work?

Rent-to-own agreements allow you to rent a home for a pre-determined amount of time, paying a little more each month for rent. That extra payment goes towards a down payment on buying the house once your rental period is over.

The experts at Professional Home Buyers can help you find the best rent-to-own homes in Wichita, KS! Call us at 316-202-1628 for more information.

What Does Rent-to-Own Mean?

Rent-to-own refers to an agreement in which someone is renting with the option to buy at the end of a designated rental period. Homeownership through a rental agreement means you’ll pay more each month to rent the home of your choice, but at the end of that period, the extra money goes towards a down payment.

How does a rent-to-own home work? There are two types of rent-to-own agreements: lease option and lease purchase. Lease option home transactions require a fee when you sign (usually between 2-7% of the home’s value.) At the end of your rental period, you can choose to buy the home or no longer live there.

Once you know what lease option rent-to-own, understanding lease-purchase homes is easy. They work the same as lease options, but with no initial fee. At the end of the rental period, you’re contractually obligated to buy the home.

The Pros and Cons of Rent-to-Own Agreements

Rent-to-own homes offer some major advantages. Below are some of the pros of choosing a rent-to-own agreement:

  • You have the opportunity to save money.
  • You save on repair costs during the rental period since the owner covers them.
  • Flexible end results for lease-option homes: buy or move.

While there are clear advantages of rent-to-buy homes, there are some disadvantages as well. These include:

  • You’ll lose money if you don’t end up buying.
  • You might not receive full rental credit.
  • If you don’t qualify for a home loan, you might be unable to buy the home.

Weighing the pros and the cons takes some careful consideration. Assessing your finances and home loan eligibility is critical before deciding on a rent-to-own property.

Home Rent-to-Own Process Explanation

Here is how the rent-to-own process works:

  1. Agree on a purchase price
  2. Review and sign the agreement
  3. Pay the option fee (for lease-option transactions)
  4. Make rent payments over time
  5. Choose to buy the home (for lease-option transactions)
  6. Apply for a mortgage

Working through these five steps is much simpler with the help of real estate professionals. These professionals will help you find the best rent-to-own home for your needs, leading you one step closer to home ownership.

Professional Home Buyers

Are you interested in rent-to-own home options? Let Professional Home Buyers guide you through the process! Our experts can help you understand the rent-to-own agreement details, making each step of the journey easier.

How does a rent-to-own home work? Call us at 316-202-1628 to find out!

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