Are you hoping to buy a home, but just don't have the funds for a down payment? A down payment is typically 20% of the purchase price but can be as low as 8%.
The rent-to-own option allows buyers who don't qualify for a mortgage to purchase a home. A portion of the monthly rent goes towards a down payment for the house.
Rent-to-own homes can be the perfect path to homeownership in the Greater Philadelphia housing market. Keep reading as we explain how rent-to-own works in this informative guide!
Understanding Rent-to-Own Agreements
With home prices on the rise around the nation, home ownership is the least affordable it's been in two decades. Is rent-to-own the way to go?
First, you need to understand how rent-to-own agreements work. Also called "lease-to-own agreements" or "lease options," a tenant has the option to purchase the rental property.
Sometimes the agreement is incorporated into one document, but usually it's a lease agreement with a separate option to purchase the home.
What's in the Lease or Rental Agreement?
The lease agreement states that the title to the house stays with the landlord until the renter chooses the option to purchase the home. The agreement states the duration of the lease period and the repair and maintenance responsibilities of the landlord and the tenant.
Pros of Rent-to-Own in Philadelphia
One of the advantages of leasing homes with an option to buy is not having to go through the mortgage process if you have credit challenges.
Another pro is it gives you time to save for a down payment or to pay it down with your monthly rent payment. You also get a chance to "test drive" a home and neighborhood before you buy.
Cons and Risks of Rent-to-Own
There is a downside and some risk with this option. If you choose to back out of the deal, you may lose your initial investment. Rent credits are often non-refundable.
The overall costs tend to be higher. There is a lack of legal protections compared to mortgages.
You take the risk of the house ending up in foreclosure or a lien being placed on it. If you have a rent-to-own agreement, you may inherit these problems.
Navigating Rent-to-Own in Philadelphia
A professional real estate agent can help you find legitimate rent-to-own opportunities in the Philadelphia area. Look for one who is familiar with rent-to-own homes and the agreements that go with them.
A real estate agent will help you stay within your budget and not waste your time looking at properties you can't afford. He or she will also know the legalities that go with the process.
Rent-to-Own Homes
Now that you know how rent-to-own homes work, is that a viable option for you to get into the Greater Philadelphia housing market? With the above rent-to-own property tips, take advantage of this affordable housing option.
Property Management International Greater Philadelphia can help you with your home search. We are a full-service real estate asset management company. We provide professional property management and real estate brokerage services.
Contact us today to set up a consultation.
