Most of us have at least heard the term 'rent to own'. In fact, some companies such as Prime Time and Rent A Center have made a fortune over this concept. But even if this works great for someone who has severe problems with their credit, it would not be the best route for most of us. It is no different for homes.
Rent to own might seem an inexpensive way of owning something, but it does cost more in the end. Rent to own merchandise for example, may sound quite compelling at a few dollars a week. But, the agreements usually run for about 15-20 months, which is the reason the companies make money. Although you may be paying just a few dollars a week, the total amount quickly adds up to nearly twice the cost of the item.
Along with paying rent, you'll also have to pay applicable sales tax as well. Like merchandise, rent to own real estate has it's disadvantages. Even if it can be the only way someone with bad credit can buy a house, if your credit is good you are much better off with a regular mortgage. You'll still have to pay back your lender with a mortgage, although that amount won't be nearly as high as it would if you decided to get a house on a rent to own basis.
Rent to own properties are usually put on the market by the owners. Dealing directly with the owner can be an advantage. The contract offered will probably start as a regular lease, and then work its way to becoming a rent to own if you decide to stay. At this point, you and the owner will probably negotiate the terms, which will probably go on for several years. Some owners are very flexible and will work with you just to get the price they want for their home, while others will charge you quite a bit more, in order to make a hefty profit.
If you have bad credit and can't get approved for a mortgage, then rent to own would be your next best option. Even if the price is sometimes prohibitive, some people prefer rent to own to just renting an apartment. Rent to own homes allow to put your money toward your home instead than just throwing it into a rent. In some cases this is fine, although you should make sure to double check with the owner before you agree or commit to anything. This way you will be clear on how much it will cost you to own your home in the end, and you will know exactly how long it will take.
Rent to own might seem an inexpensive way of owning something, but it does cost more in the end. Rent to own merchandise for example, may sound quite compelling at a few dollars a week. But, the agreements usually run for about 15-20 months, which is the reason the companies make money. Although you may be paying just a few dollars a week, the total amount quickly adds up to nearly twice the cost of the item.
Along with paying rent, you'll also have to pay applicable sales tax as well. Like merchandise, rent to own real estate has it's disadvantages. Even if it can be the only way someone with bad credit can buy a house, if your credit is good you are much better off with a regular mortgage. You'll still have to pay back your lender with a mortgage, although that amount won't be nearly as high as it would if you decided to get a house on a rent to own basis.
Rent to own properties are usually put on the market by the owners. Dealing directly with the owner can be an advantage. The contract offered will probably start as a regular lease, and then work its way to becoming a rent to own if you decide to stay. At this point, you and the owner will probably negotiate the terms, which will probably go on for several years. Some owners are very flexible and will work with you just to get the price they want for their home, while others will charge you quite a bit more, in order to make a hefty profit.
If you have bad credit and can't get approved for a mortgage, then rent to own would be your next best option. Even if the price is sometimes prohibitive, some people prefer rent to own to just renting an apartment. Rent to own homes allow to put your money toward your home instead than just throwing it into a rent. In some cases this is fine, although you should make sure to double check with the owner before you agree or commit to anything. This way you will be clear on how much it will cost you to own your home in the end, and you will know exactly how long it will take.
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