Most of us are pretty used to hearing the term “rent to own”. Places such as
Prime Time and Rent A Center have built an empire with rent to own merchandise,
although the buyer normally ends up paying double what the merchandise is
actually worth. While this may be great for those who have bad credit, most of
us prefer to avoid going this route. Homes are no exception, especially if you
are buying a home on a rent to own basis.
Even though rent to own may be good as a quick-fix, it looks to be an expensive
way for someone to buy something they intend to keep. Rent to own merchandise
for example, may sound quite compelling at a few dollars a week. The agreement
is normally for around 15 - 20 months, which is where the company makes their
money. Although you may be paying just a few dollars a week, the total amount
quickly adds up to nearly twice the cost of the item.
Along with paying rent, you’ll also have to pay relevant sales tax as well. Like
merchandise, rent to own real estate has it’s shortcomings. Even though it can
be great for those with not so great credit, you’ll normally end up paying back
a lot more than you would with a mortgage. You’ll still have to pay back your
lender with a mortgage, although that amount won’t be nearly as high as it would
if you decided to get a house on a rent to own basis.
In numerous cases, rent to own houses are put up on the market by the owner.
This way, you’ll deal straight with the owner. It will start out as a
traditional lease, then proceed to a rent to own basis if you decide you want to
keep the home. You and the owner will then work out an arrangement, which will
normally be quite a few years. Some owners are very flexible and will work with
you just to get the price they want for their home, while others will charge you
quite a bit more, in order to make a hefty profit.
If you have deficient credit and can’t get approved for a mortgage, then rent to
own would be your next best choice. Although some don’t like to do it due to the
price, for many it’s a better alternative than an apartment. With rent to own
houses you are paying money towards the home, instead of just paying rent. In
some cases this is fine, although you should make sure to double check with the
owner before you agree or commit to anything. This way, you’ll know how much
you’ll be paying for the home - and for how long.