How Rent-to-Own Works: A Path to Homeownership
Are you renting and having a hard time getting into the real estate market? For some people, a traditional mortgage isn’t possible right now, whether because of credit, income history or self-employment. Rent-to-own is one option that can help bridge the gap.
Joe Gonzalez invited a rent-to-own specialist to Right Choice to explain how the process works.
What is rent-to-own?
In a rent-to-own arrangement, you move into a home as a tenant with a plan to buy it at the end of a set term, often around three years. During that time, you live in the home and work on getting mortgage-ready, with help from the program.
Who’s involved
Rent-to-own programs typically bring together three groups:
- Tenant-buyers: people who can’t qualify for conventional financing yet but want to own their home
- Investors: people who want to invest in real estate while helping families become homeowners
- Referral partners: REALTORS®, mortgage agents and other professionals with clients who could benefit
A personal trainer for homeownership
The specialist compared it to fitness. Some people can work out at home on their own. Some need the gym. And some need a personal trainer to push them and keep them on track.
Rent-to-own works like that personal trainer: there’s a clear target, a timeline and support along the way, and you’re already living in the home while you work toward owning it.
Proceed carefully
Joe has been in real estate for more than a decade and has been cautious about rent-to-own, because it often involves people in a vulnerable spot. Before you sign anything:
- Read the agreement carefully and understand how the purchase price is set
- Know what happens to your extra payments if you don’t end up buying
- Have a real estate lawyer review the contract
- Ask lots of questions about the company’s track record
Talk to us about your options
Rent-to-own isn’t right for everyone. The Right Choice team can help you look at all your paths to homeownership.
Call 289-276-1716 or start your home search.
