Roughly 64% of Americans own their homes while 36% are renters. The homeownership vs renting debate isn't going to be settled any time soon, but for now, the numbers don't lie: the vast majority of people want to become homeowners.
However, owning a home isn't cheap. Most of those who are renting right now are doing it because they cannot afford to buy a home.
If you're in this group, there's good news. Rent-to-own homes are becoming increasingly people, and are suitable for people who are renting but would like to become homeowners.
Read on to learn more about this path to homeownership.
How the Process Works
If you're renting, you might be thinking that all you need to do is work out an agreement with your landlord, whereby you agree on the price of the property and start making rent payments that count towards that price.
Well, you aren't too far off the point. That's the idea behind a rent-to-own agreement, but there is more to it.
First, these properties are typically offered by developers who are in the business of selling homes, not renting them out. In a rent-to-own program, you rent the property for a specified period of time, and once the lease expires, you have the buy the home or opt out.
You'll also need to pay a certain amount of money (option fee) during the start of the lease.
If you opt to purchase at the end of the lease, the rent payments you have been making throughout the lease will count toward the price of the home. If you don't purchase, you'll lose the option fee as it's non-refundable.
Keep in mind that this is a general idea of how the process works. Rent-to-own agreements have different terms and conditions from owner to owner. For instance, there's no standard rate for the option fee, so you might have an opportunity to negotiate.
Is Rent-to-Own Your Ideal Path to Homeownership?
Just like taking out a mortgage, rent-to-own isn't for everyone. Don't jump on it because you're not currently able to secure a traditional home loan or don't like the idea of paying a loan for several years.
Evaluate your finances to establish whether you want to buy a home this way.
In many cases, rent-to-own contracts are short, typically less than five years. This infers that, compared to a mortgage for the same house, your monthly rent payments will be sky-high.
Ensure your finances will allow you to make such payments comfortably. Needless to say, if your financial circumstances change and you default on rent, the agreement will be terminated, and you will face eviction.
Rent-to-Own Homes: Explore Your Options
There's no doubt that rent-to-own homes present a viable path to homeownership. However, they're not for everyone. Homeownership is a big financial commitment; you have to assess your personal situation to determine if this path works for you.
If you're ready to start your journey in Clarksville, Oak Grove, or Hopkinsville, PMI Eagles is ready to serve you. Our real estate management company is led by licensed realty professionals with vast local expertise.
Schedule a consultation to learn more.
