5 Reasons Why You Should Avoid Rent-To-Own Home Contracts

5 Reasons Why You Should Avoid Rent-To-Own Home Contracts

After renting for so many years, you calculate the amount of money paid in rent payments, you get the urge of exploring the idea of purchasing a home. The first thing you probably do is to browse online and see what’s for sale in the area you’re interested in. You find a few homes you like and save them in your search. What do you do next? If you contact the listing agent, they will most likely ask for a pre-approval letter or proof of funds. So, why not start from there to begin with. You remember seeing a commercial on TV from a lending institution that offers to pay all your closing costs. Great idea! So, you call them only to find out you can’t qualify for a mortgage at this time. What’s next? Keep googling, you’ll find a solution! You stumble upon a post about rent-to-own homes. Perfect!


Is it perfect though? What is a rent-to-own home and how does it work? In a rent-to-own contract, the seller agrees to hold a portion of the rent towards a down payment. The rent option may be several months or several years depending on the agreement. At the end of the term, the buyer must get pre-approved for a mortgage and purchase the home at the agreed-upon price. Sounds good so far? Well, not so much. Here are 5 reasons why rent-to-own homes may not be so favorable to the buyer.

-Home prices change. The home you fell in love with may not worth as much in a few years.

Real estate market changes. Granted, home prices have been going up for the past few years but will the trend continue? The truth is, nobody knows for certain.

-You may decide to move to a different area in a few years. It may be the climate, job, family but we do change our minds on where we want to live.

-You may be responsible for the repairs and the maintenance of the home you don’t yet own. Let’s face it, homes need constant maintenance. Making repairs and maintaining your own home is one thing but are you prepared to spend money making repairs on someone else’s home?

-Option money. Most sellers entering into a rent-to-own contract will ask for a non-refundable deposit at the beginning. The amount of the option money is agreed upon between the seller and the buyer. In most contracts, it will go towards the purchase. Be sure to read the fine line, you may lose this money if you decide not to go through with the purchase.

-Higher rent. Most rent-to-own homes have higher monthly rents than typical for the area. Although the part of the rent goes towards your purchase, you’ll still be paying a higher rent.

I would highly recommend contacting a local, knowledgeable REALTOR® who can direct you in the process. While browsing online is OK, you can’t trust everything you read. 

If you are looking to buy or sell a home in Clermont, Minneola, Groveland, Mascotte, Winter Garden areas, I would love the opportunity to speak with you. Please call/text me at 407-929-1852, email bethatalay@gmail.com or visit www.WhereToLiveInOrlando.com 


5 Reasons Why You Should Avoid Rent-To-Own Home Contracts

 

Beth Atalay, Broker/Owner Cam Realty and Property Management 407-929-1852 Wheretoliveinorlando.com BethAtalay@Gmail.com Your Orlando Agent - Where to Live in Orlando