List of Pros and Cons of Rent to Own Homes
Rent-to-own, to some, looks like the best possible situation when it comes to their personal finance. Consumers look at house prices and see them way too high for their possibilities, but way too low for what they could be valued at. As such, rent-to-own is great, apparently. They live in the house by renting it, and if the price is right, they go in like sharks and buy the house, with the money they paid in rent already counting towards the purchase. Looks perfect. Usually these contracts last up to five years, and at least two years. At the end the renter can choose to buy the property in which the rent paid count towards the transaction, and if not, the homeowner can kick the renter out while keeping all payments in the rent.
List of Pros of Rent to Own Homes
1. Test Drive Your Home
The advantages are clear for the renter, he can simply buy a house after taking it out on a test drive and living in it, and at the end of this test drive he has been paying for the house already, so he just needs to finish the payment and keep it.
2. Great Option for Homeowners
As for the homeowner, it is hard to sell houses nowadays, and so if he can get any money in, it is good. Instead of leaving the house empty, he can get renters in it with the possibility of buying them after some time. They might be homeowners, but times are tough for everyone.
List of Cons of Rent to Own Homes
1. Putting Money Into Something You May Not Like
On the other hand, if he does not want to buy the house, all his payments are just going away into the dark, and he can get homeless pretty easily. If that was not enough, should the price of the home go down in the next few years after signing the contract, he will find himself paying way more then what he should because the contract was already signed.
2. Homeowners Can Miss an Immediate Sale Opportunity
This is great for them as well, but then again, by keeping renters in the house that do not want to buy the house, they can be actually missing out on their real buyers. Of course, it is possible to terminate contracts under some pre-determined clauses.
3. Terms of Termination May Not Work for You
Renters need to be incredibly careful when signing contracts, because some terms might allow the seller to terminate the arrangement leaving them empty handed. It is a necessity for them to guarantee they are making a good deal and not being used for rent until real buyers come.
All in all, these arrangements can be incredibly helpful for people who actually aim to buy houses but are facing though financial times. However, they do need to keep a keen eye on things because the contract can trick them into being used for rent, and they can end up wasting away money towards nothing.