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  • Writer's picturecindyryb

From Renter to Owner: How Rent-to-Own Can Make Your Dreams of Home Ownership a Reality

house with keys
Is a rent-to-own agreement right for you?

Are you tired of the endless cycle of renting? Do you dream of owning your own home but feel stuck without a down payment or perfect credit score? Trust me, you're not alone. Many aspiring homeowners face similar challenges. But fear not, because there's a solution that could turn your dream of homeownership into a reality: Rent-to-Own agreements.

In this blog post, we'll explore how a Rent-to-Own agreement can change you from a renter into a homeowner. Let's dive in!

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What is Rent-to-Own?

Also called a lease option or lease-to-own, this is a unique agreement that bridges the gap between renting and buying. The tenant agrees to rent the property for a set amount of time, with the option to purchase the property at a predetermined price at the end of the lease term.

kitchen with white cabinets and stainless appliances
Can a rent-to-own agreement get you to your dream of owning a home?

What are the Benefits of Rent-to-Own?

  • By establishing a rent-to-own agreement, you have a clear passageway to home ownership. Rather than waiting to save up a down payment for purchasing a home, with a properly written agreement, a portion of your rent is saved towards the purchase. This helps you to begin building equity in your future home while you rent.

  • With a rent-to-own agreement, you lock in the purchase price of the home now. Prices can change rapidly, but by locking in what you'll pay for the home now, you'll have peace of mind and a feeling of stability.

  • If your credit is less than perfect, a rent-to-own agreement may let you improve your credit score while living in the home you want to purchase. During the lease period, you can work on repairing your credit to get you ready for a mortgage. Here are two posts that may help - they apply to a rent-to-own situation as well: "What can I do to improve my credit before switching rentals?", and "Can I rent if I have bad credit?"

  • Have you heard of the idea of "try before you buy"? That's the nice thing about renting to own! You'll see if the home you're considering meets your needs. You'll be able to see if the home is in good shape or if there are issues. You'll be able to see if you like the neighborhood.

realtor with house key
Make sure you understand that rent-to-own agreements have both pros & cons to them.

What are the Disadvantages of Rent-to-Own?

  • Most likely, you'll be paying more monthly in a rent-to-own situation. The reason for this is that part of the amount you'll pay in rent will be saved towards your down payment. Make sure you can afford the higher cost.

  • Depending on the way the agreement is written, you could lose money if you decide not to purchase the home at the end of the agreement. For this reason, it's important to have a rent-to-own agreement reviewed by someone who understands the laws in the state where the property is located (most likely, a lawyer). Be certain that your interests are protected in the agreement you sign!

  • The real estate market changes rapidly, and this can be a good or a bad thing. If interest rates skyrocket, it may force you to back out of the deal. If property values drop, you may no longer feel like the purchase price you agreed to upfront is a good deal. Again, backing out can cause you to lose money, so it's important to have a lawyer review any rent-to-own agreement you sign so that you completely understand the agreement.

  • It may be difficult to find a seller that's willing to make a rent-to-own agreement. There is a website called RentBeforeOwning.Com that can help you find properties in your area. There is a free seven-day trial.

living room in a rent-to-own home
Protect yourself by having rent-to-own agreements reviewed by a lawyer before you sign them.

Final Thoughts:

There are risks and benefits to many things, and this includes making a rent-to-own agreement. Make sure you understand the pros and the cons before you sign, carefully consider your options, and seek professional guidance before entering into any agreement. By making informed decisions, you may find that rent-to-own can make your dreams about homeownership into a reality for you!


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