This concept is not very new in the market, but it has gained much popularity since the economic crash and the credit crunch. The lease is something like a normal rental agreement and the tenant agrees to pay the monthly rent as long as the rental term exists and then the tenant can exercise the power to buy the house. The rent paid is usually deducted from the purchase amount of the house. When the renter is considering the rent to own houses option, the rent is a little higher than usual but works as a way to create a housing deposit with the landlord in case of eventual purchase.
Rent to own houses give opportunities like loans for people with a poor credit history to be able to buy a house. This is because the tenant or the potential buyer need not make a hefty down payment in order to buy the house; he may just have to rent the house for a fixed period and then he will have the option to buy the house. This way he may have enough time to collect some money to purchase the house.
As for sellers, when there are so many houses available for sale, it may be difficult to sell a house. And if the reason for the sale is the purchase of new house, then paying the mortgage on both places will be very difficult if he cannot sell the old house. In this case, the seller can give his house out on a rent to own houses basis and then he will be able to make the mortgage payments on the new house as well as create some savings. Also, in the long run, he will be able to sell the house to the tenant, thus making a capital gain.
A Rent-to-Own program, also known as a Lease Purchase program, is a great way to buy a home through non traditional channels. Why would you buy a home under a Rent-to-Own? For starters, if you’re unable to purchase by traditional means because your credit is not in the best shape, then a lease purchase may be your next option. The current real estate market offers some great deals and now is the time to negotiate a lease purchase that will benefit you. But you don’t want to go into a lease purchase blind. It’s good to know the positives and negatives of buying a home through a lease purchase or rent to own program.