So you are tired of renting. You would like to own your own home, but you will not have access to much of a deposit. Without doubt you’ve probably heard of “the perfect solution” – rent to obtain. But would it be really as perfect as everyone says – hardly. There are a few secrets about rent to have properties that you need to learn about. They are most overlooked areas of a rent to possess deal. So why don’t we know the truth about lease to possess homes.

How Rent to Own Works

Making this the ins and outs. You rent a house together with the substitute for buy. You will have lease which will typically last between Two or three years. The vendor will likely expect you to put some type of upfront deposit or option fee. Normally, this is 1 to 7 percent in the arranged cost. In addition to the rent, you will pay what is known as a Rent Premium or Rent Credit. This extra amounts put towards cost of the house.

Let’s wait and watch how a Salt Lake City, Utah rent to own would work out. At the time of January, 2017 the median rent for the 3 bedroom, 2 bath house in Salt Lake City is $1,500. Currently the additional amount that you will pay on the purchase is negotiable. Generally you are very likely to spend 20 to 50% higher than the market rent. In the interests of argument, let’s opt for 25% which is about average. So you’ll pay $1,500 30 days in rent with an additional $375 towards purchase. In case your lease lasts 3 years, you’d probably possess a rent credit within the volume of $13,500. Median home in Salt Lake City are $280,000. If you paid a 3% option fee of $8,400 and combined by purchasing the rent credit, you would end up with a deposit of $21,900 or 7.8%. So good.

The Truth about rent to own properties

Would you like to understand the dirty little secret few buyers in your position realize? In the event you think that you might be unable or unwilling to purchase the house at the conclusion of the lease agreement, you forfeit Every one of the money that. That includes the Rent Premium and also the option fee. Gone. Everything. Owner keeps the money and you also get to call a moving van and begin all over.

You’d be surprised how often times such a thing happens. The customer might run into some problems with the house and so they want out. Money lost. The purchaser is probably not in a position to be entitled to home financing. Money lost. Or, think the seller fails to pay the mortgage and also the property gets foreclosed on. Yikes! Money lost.

So, when you race to snap in the closest rent to possess or lease option property, be sure to do your required research and enjoy the house inspected. Begin working having a lender in order to qualify for home financing and for goodness sake, be sure you love the house.
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