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In a normal house buying process, the sale is made immediately after the offer is accepted, and the deal is completed at end. The fact that many buyers don’t have the money to pay for cash, they take a mortgage is used to finance the purchase. Usually, the buyer will make a down payment and then pay the bank equal monthly installments.
To qualify for a mortgage, however, the buyer has to have a good credit score and have money for down payment. In the absence of these, the potential buyers may not benefit much from the traditional meth of buying a home. However, one can benefit from the option of the rent-to-own agreement. This type of agreement allows the buyer to the rent he home for a particular duration of-of time before they can think the option of buying the property when or before the lease expires.
Features of The Rent-To-own Agreement
The the contract shows time and the manner in which the buying price of the house will be determined. There are times when the seller and the potential buyer will agree on the purchase price after the agreement has been signed-often at or higher price than the current market value. Other times, they will decide to determine the price once the contract has expired based on the market value that future point in time.
During the lease period, the potential buyer pays the seller a specified amount of rent each month. The lease period is negotiable but frequently ranges between bone and three years. In many agreements, a portion of each monthly rent payment is applied to the purchase price.
Depending on the terms of the agreement, the potential buyer may be responsible for maintaining the home and taking care of any repairs, homeowners association fees, property taxes and insurance. The seller is overall responsible for the association fees taxes and insurance, he may decide to cover those expenses. Even in this case, it is important that the buyer has a renter’s insurance policy to cover for a loss of personal property or if anyone accidentally hurts themselves in the property.
Be sure to have the maintenance and repair requirements specified in the contract. Property maintenance is entirely different from replacing damaged roofs.
A the rent-to-own agreement is an ideal option for people who want but are not ready to become homeowners. It allows them the chance to get their finances in order while locking in the house they’d like to own.
It is important that the potential buyer is sure that they will purchase the home once the lease period is over for this type of agreement to work.