How Do You Find Rent-to-Own Homes?

By Staff WriterLast Updated Sep 17, 2020 9:35:38 PM ET
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For most people looking to get a house, taking out a mortgage and buying the property directly is their path to homeownership. While this approach has advantages, it also has drawbacks: You'll need a good credit score, money for a down payment and a commitment to pay the monthly mortgage for the next 20 or 30 years. Unfortunately, this process is not ideal for everyone.

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However, for those with low credit or who are uncertain about their ability to commit to living in a single area for a long time, leasing a house with the option to buy it from the owner later can be a way to finally have a home of one’s own on manageable terms. While rent-to-own isn’t the best choice for everyone, and not all rent-to-own deals are created equally, great deals are out there — if you know where to look for them.

Understand the Rent-to-own Process

For most people looking to get a house, taking out a mortgage and buying the property directly is their path to homeownership. While this approach has advantages, it also has drawbacks: You'll need a good credit score, money for a down payment and a commitment to pay the monthly mortgage for the next 20 or 30 years. Unfortunately, this process is not ideal for everyone.

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However, for those with low credit or who are uncertain about their ability to commit to living in a single area for a long time, leasing a house with the option to buy it from the owner later can be a way to finally have a home of one’s own on manageable terms. While rent-to-own isn’t the best choice for everyone, and not all rent-to-own deals are created equally, great deals are out there — if you know where to look for them.

Why You Should — and Shouldn’t — Rent to Buy

This arrangement lets you experience living in a house before buying it, potentially build equity as long as you buy the home, avoid committing to buying a house if your future is uncertain and locks in the price of the home. However, the price lock goes both ways — it can also harm you if housing prices fall over time.

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Additionally, you may be responsible for a portion of maintenance, there’s no guarantee that a bank will grant you a mortgage at the end of the rental period, problems could crop up with the landlord and you could always fail to have the money to buy the house at the end of rental period, wasting your premium payment and rental credit. How these pros and cons affect you is ultimately tied to your personal circumstances, so think carefully before making a decision.

Go Through a Mortgage Broker

So how do you find an own-to-rent home? The best way is often to turn to friends or family, assuming  you’ve lived in the area for a while. By getting the word out that you’re looking for such a deal, you may be able to find offers that aren’t widely available, and with no brokerage fees involved. You may be able to get a better deal on a place, and even if you don’t, you’ll at least have a feel for your landlord and seller’s trustworthiness before starting a financial relationship with them.

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You can also go online and look for rent to own homes available in the neighborhood you want. Many general real estate sites, such as Trulia, include postings for rent-to-own properties, while other sites, such as YourRent2Own.com, specialize in them. Contact the seller and take it forward from there. Just be sure to examine all deals carefully, as rent-to-own contracts can contain unfair terms or even be scams.

If you’d like assistance in your search, you can always turn to a broker or a real estate agent to ensure you get a good deal. In addition to knowledge about the local market and available properties, these people can also connect you with the right finance options to help you eventually buy your home.

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