Purchasing a House via Agreements

For many people living in rental homes, their goal is to be able to buy a home of their own at some point. This however remains a pipe dream because just when they think they have what it takes, something happens and the money they have saved is diverted. This of course is very frustrated and makes life hard.

You go to the bank and every time you apply for a mortgage, your application is rejected for the simple reason that you do not have enough money for a down payment. This is extremely frustrating for many people and the first thought they have is to give up on their dream of owning a home. But before you throw in the towel, there is a way out for you. Ever heard of rent to own?

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Rent to own refers to a special kind of a lease made between a home owner and a potential buyer over a particular property. The buyer simply rents the home and has the interest to buy it after a couple of years. The two parties agree on the sales price and the monthly rentals to be paid. If a mortgage is out of reach, this is a great option that benefits both parties while protecting their interests.

There is a lot to be gained by all parties in these agreements but as usual caution must be exercised to avoid falling into bad agreements. If the terms are not properly set to cater for both parties a lot of losses can be incurred. It is therefore important for each to be fully aware of the terms stipulated in the contract they sign. Real estate agent or attorneys should be involved to draft up the lease and explain it to their respective clients.

So in a typical scenario, the buyer is required to put down a percentage between 1- 5 % and this acts as a down payment and continues to pay monthly rentals. All these amounts are credited to the total cost of the property. These payments are negotiable and it up to both parties to agree on the amounts. Many home buyers take a lease to own property and within the specified period of time when they can exercise the option to buy, they work on their finances and their credit rating so as to qualify for a mortgage.

A wise person wanting to buy a home will use the lease to their advantage and save as much as they can towards purchase. Like all agreement, there is the option to terminate and move on, which means the buyer will not buy the home. Happens is the owner gets to keep the down payment as well as the monthly rentals as stipulated in the contact. Some contracts do allow the buyer to sell off and in this way, get some money back.

There is a lot of benefit to be derived from lease to own contracts and because of that, many people are getting into it as an achievable way towards home ownership.