If youre thinking aboutbuying a homeat some point, heres what you should know about this option.
What is rent-to-own homeownership?
But there are a few different methods for arranging this.
The two categories of rent-to-own agreements are leaseoptionand leasepurchase.
Lease purchase:The buyer must purchase the home at the end of the lease period.
If they dont, thell have to pay penalties that are spelled out in the agreement.
Those penalties could include forfeiting funds contributed to the down payment.
What are the perks of rent-to-own?
Rent-to-own arrangements can offer a homeownership experience while you prepare for the costs of purchasing your own place.
It can also provide a test period for buyers.
What are the risks?
Humes explained that in a standard sale, the buyer and seller have limited contact.
Why does it have a bad rap?
Somegovernment programsalso took over foreclosed properties and provided them on a rent-to-own basis for low-income families.
This can become a problem if for some reason the seller doesnt pay their taxes or mortgage.
The home might go into foreclosure.
The contract should clearly define whos responsible for repairs and maintenance during the lease term.
