When talking about rent to own, there are those who do not understand what it is about. Basically, renting to own a home is much like leasing and it works in different ways. For instance, tenants can choose to rent for a set period such as a year. When the year is up, they have the choice to purchase their home. A portion of their rent is credited to the sale price of the home that the renter is buying.
Tenants can also buy the property for a pre-determined price when their lease ends as long as they make a downpayment which is non-refundable. After this transaction is done, the tenant is not contracted to purchase at the end of the lease. However, the property owner cannot sell it to anyone else. If you want to rent to own homes in Massachusetts, these are the options that have to be considered.
Option for Individuals with Bad Credit
For those who have credit trouble, this option definitely appeals to individuals who wish to become homeowners but have little or no savings for the down payment. This is also appropriate for people who have no credit or bad credit and not qualified for traditional mortgages. The latter group includes those who have lost their homes in foreclosure or had a negative experience with rent-to-buy contracts. Renting to own is a way to get into a desired neighborhood. It is a way to get into a house and not commit to decades of mortgage payments. This is a great option for those who wish to buy lease to own homes in Worcester MA.
Pros and Cons
Let us discuss the pros and cons. For those opting for the lease rental, the primary advantage for the buyer is that a price can be locked in. However, there are several potential drawbacks and numerous concerns that make rent-to-own more complicated. Oftentimes, it is more expensive compared to just renting. Among these types of homes, the tenant’s rent payment is likely higher than the market rent because this is the eventual down payment on the property. This extra amount is forfeited if the tenant decides to not buy.
Options for Tenants
The potential buyer is also responsible for buying the back taxes that the owner has incurred. Prospective home buyers must have their homes inspected just like any homebuyer purchasing a home in the traditional and conventional manner. However, if the renter/buyer can no longer make payments, this results in eviction and foreclosure.
Some apartments offer the option for their tenants to sign a lease with an option to buy by putting a percentage down which is usually around 20%. The first year of rent goes toward lowering the purchase price. Usually this is a win-win situation for tenants. When looking for homes for sale in Worcester, MA, you can ask the seller if this option is available.
For those who cannot afford the 20% down payment, there are alternatives. There are government home loan programs that lend to individuals with bad credit, have little savings, and low income. There are also low down payment options. If a tenant is renting and able to afford higher payments, this is an opportunity to build a better credit rating and simply make a down payment. Renting to own is one of the smartest decisions a tenant can do. Thinking about the long term and deciding rent to own homes in Worcester, MA makes people feel that their homes are worth investing in.