How does Rent-to own work and is this for me?

More and more you can see signs in front of home asking you to "rent to own" or "lease to buy" this specific home. Now you are wondering if this is something for you?

Here is what you need to think of:

• You have an up-front fee called option fee that is a percentage of the agreed purchase price.
• When you as a buyer back out of the agreement or you might get evicted due to none payment, you might loose the option fee.
• When you are more then three times late with your "Rent" payment, you might loose your option money as well. Remember when you agree to a rent-to-own contract, you have to pay on time. No questions....!!!
• In a rent-to-own contract, you as the renter will be responsible for any repairs on the home; you do not have the landlord to fall back onto.
• In a rent-to-own contract, you have so many months (years) to buy the home. When you fail to provide property financing on time you also might loose your option money
• During the option period you can rebuild your credit
• A percentage of your monthly payment goes to paying the rent and the other part goes to building your down payment, that percentage is based on what you and the seller agreeing on in the option agreement.
• You are in a home compare to an apartment (not everybody likes to be in an apartment)
• You can plan, and you do not have to vacate or renew your lease each year.

One thing you need to keep in mind. The seller most likely can not afford to make both payments (the home you are leasing and their current home they are living in) and they do rely on you to make your payment on time. When you can not make the payment, they can not make theirs and the home might face foreclosure.