HOW DOES RENT TO OWN WORK?
Rent to Own agreements are designed to create a Win-Win scenario for both the home purchaser and the financing or investment company. New home owners are interested in securing a property which they can call their own – and financers are interested in protecting their investments.
By designing a proper Win-Win agreement, financing companies and investors can feel confident that their mortgages will be kept up to date and paid on time, while new home purchasers experience the satisfaction of living in their own home while also successfully rebuilding their credit. The combination of “pride of ownership” as well as intelligently designed contracts provides security and incentive for both parties to keep the property in excellent condition and payments up to date.
At the end of a specified term (often 2-3 years) the Rent to Own agreement will reach maturity, at which point in time the new home purchasers will have contributed to an options payment program that will go towards your option to purchase. Depending on the specific arrangement, this is usually an opportunity to access traditional financing and completely purchase the home independently. Alternatively, if something has changed with the purchaser’s situation other options may be available.