For many home buyers, buying a home is the biggest decision and purchase that they will ever make. Buyers and sellers must weigh their options and all the important factors before they agree to a contract that is binding and cannot be backed out of in the future. Just like every agreement, there are advantages and disadvantages for buyers when buying rent to own homes for sale in Worcester MA.
Advantages of Rent to Own
Buyers have time to build their income and credit history while renting the house. This is the very reason why a number of renters opt for this set up. These are individuals who have a bad credit history and not enough savings to buy the house right on the spot. With a rent-to-own agreement, the renter has one to three years to save up for a home and does not have to worry about the downpayment. This is because a portion of what the buyer is paying the seller automatically goes towards the down payment of the house. This takes place if the buyer and seller have already agreed that the buyer will purchase the house at the end of the lease.
If there is something seriously wrong with the house, then a buyer can back out of the agreement. The renter loses the option fee and all the rent credit money that was paid but this amount will be much less in comparison to the amount the renter would have paid for the house outright and decided to leave later.
Disadvantages of Rent-to-Own
Buyers still must pay the upfront option fee. It is usually a percentage of the agreed upon selling price of the home. This often costs around one thousand dollars. The money goes towards the down payment if the renter wishes to buy the house.
If a buyer is one day late on a month’s rent payment, most agreements will void the credit for the month. Here is an example. A three-year renter received a credit of $200 off his rent every month. If the buyer paid the rent late three times a year, then at the end of the lease period, the buyer would receive $1,800 for what was supposed to be the down payment. A buyer must pay on time all the time. That is part of the agreement.
There is also a possibility that repairs must be done. If that is the case, it is the renter’s problem especially when this is during the rental period. This is the very reason why renters must meticulously inspect the house before signing the agreement. Some even bring their own home inspector just to be on the safe side.
A Solid Agreement is Important
Whether the individual is the buyer or the seller when negotiating an agreement for homes for sale in Worcester, MA, both parties have to consider the possible situations that can make them lose money. A thoroughly-made agreement which both parties have agreed on can cover all problems just in case they ever arise.