Lighting the Path to Homeownership

My Rent Buys Home

Renting is a great way to pay for housing — in fact, renting is a great way to pay for many goods and services.  You can rent cars, tools, furniture, appliances, etc. Everyone appreciates that renting is an essential option to fill a need.  So, how about renting with the possibility of owning.  Isn't this a great way to get what you want before you might have all the funds needed to make an immediate purchase??

Are You Ready Check List?

Budget

Whether you rent or buy, it is essential that you have a complete understanding of your total housing budget.

When a tenant pays rent, you can be sure that the landlord calculated all the costs associated with owning the property -- maintaining the property and making a profit off the property. Likewise, as you plan for your new home you need to do the same. Avoid becoming “house poor;” remember to budget for all things important to you. We can help. 

The Finance Side of Rent-To-Own

People who choose a Rent-To-Own home do so because they want the benefits of homeownership, but they are not quite prepared to make a purchase. So, they rent for a short time -- usually 18-36 months and then when they have strengthened their finances they exercise their Purchase Option for the home. It gives them the opportunity to move into the home of their choice faster while they improve their finances to make the purchase.

Have you begun saving for your down payment? Have you consulted with a mortgage banker to learn what is needed for you to qualify for homes you like? Are there past credit issues that need to be cleared up? Do you have an action plan to get things resolved? If not, do you want to put one together so you can realize your dream? Does your budget include a cushion to handle unexpected repairs and purchases?

Think Location • Think Long-term

Purchasing a new home is a life planning decision. Many issues are considered. How close do you want to be to family, friends, work, schools, church, shopping, and recreational options?

Consider the neighborhood. Is it comprised of mostly homeowners or renters? Is it on a busy street or a quiet cul de sac? Is the home layout typical or unusual? Are there any local or regional changes planned that will increase or diminish the value of your home?

How Does Rent-To-Own Work?

Structure of a Proper Rent-To-Own Transaction

When done properly and legally a Rent-To-Own transaction is comprised of two distinct and separate agreements: a RENTAL LEASE plus an OPTION TO PURCHASE AGREEMENT. This is most important because the Option To Purchase Agreement guarantees you the right to purchase the home at a price set today no matter if the value of the house is worth more when you later settle on your purchase. Furthermore, if for some reason, you chose to not purchase the home, you are under no obligation to do so.

Meanwhile, the Rental Lease functions in the traditional manner except for one unique difference — the landlord does not require a Security Deposit. Instead, when a tenant enters into to an Option to Purchase Agreement, an Option Premium payment is required to bind the transaction. Later, when it is time to settle on the purchase of your home the Option Premium is applied to the Purchase Price and counts toward your down payment. Typically, the Option Premium is about 3.5 – 6.5% of the agreed upon Purchase price for the home.

Action Steps to Get Started

First, we need to know where you’d like to live and the amount of your housing budget so we can match you to exactly what you’d like.

Next, we will begin to work with you to find the property you’d like.

Finally, we’ll review your finances so we can develop a plan to ensure you qualify for a home purchase as quickly as possible.