For many practical home buyers, a rent-to-own home may be the best option. This is also called a lease-to-own house and the process is similar to a car lease. Renters pay a certain amount every month to live in the house and at the end of the agreed period (usually it is within three years), they have the option to buy the house.
This is why both renters and sellers need to be transparent about the contract. They have to agree with all the terms that they come up with. Rent to own homes in Massachusetts has advantages and disadvantages for both parties. Buyers have the chance to purchase a new house and the seller is relieved of mortgage payments. This is the best option for buyers who cannot afford to purchase their own home.
The Rent-To-Own Process
Before entering into an agreement, sellers must decide on the sales price as well as the charge for the rent. Both amounts are subject to negotiation just like a regular sale. However, sellers and buyers must remember that once the contract is signed, the sale price of the house is locked until the end of the lease term that is agreed upon. This is normally between one and three years. Even if the prices of other houses increase or decrease during this time, the original agreed upon price is constant. It does not change. Rent to own homes in Massachusetts should always have this type of agreement.
Renters can also pay an option fee and rent premium. The option fee is a set amount that the renter pays the seller. If the renter purchases the house at the end of the period, the option fee becomes part of the down payment. If not, then the option fee is the income for the seller. Rent premiums are amounts that are slightly above typical rent prices, with a portion of that money going towards the down payment.
For buyers who don’t have a qualifying credit score or enough money to purchase a home, they can opt for the rent-to-own option. Sellers are also eager to relieve themselves of the burden of an old home so they can earn money even if they sell the house or not. Once the leasing period expires at the end of the contract, the renter can choose to buy or not buy the house. If a buyer chooses not to buy the house, the seller keeps all the money.
Deciding Whether This is the Best Option
Purchasing a home is one of the biggest decisions anyone can make in their life. Some people do not find it practical to spend money on a home or apartment that you will not own in the long run. Many people believe that it is better to save the amount spent on rent and use that money for a future mortgage. For renters who do not have no other options, this is the way to go. Rent to own homes in Massachusetts provide renters and sellers with this option.
The key is knowing if this option is right for the individual. Renters may think right off the bat that it is a good decision, but in the long run, renting to own costs more than just renting an apartment. Therefore, it is best that all bases are covered before renters and sellers sign a contract that neither party can back out of in the future.