Rent to own homes offer a more friendly way for people who don’t currently have enough money to make a down payment or to secure a mortgage for the house they wish to buy. It also creates an opportunity for home sellers to stop their homes from going off the market or having to reduce the price. Although rent-to-own homes have effects on both sellers and buyers, in this article, we’ll be focusing on the effects it has on buyers.
A rent to own home means that the buyer gets to sign a lease that gives them the opportunity to buy the house that they are renting. In addition, by making prior arrangements, a portion of your rent can be put towards the down payment of the house.
Although renting-to-own a home has a lot of advantages for the buyer, it also has some potential disadvantages and some of them include:
#1.You could lose the home
There are many ways you could lose the house. The landlord/seller could lose the house to Mortgage, or you could be unable to buy the house at the end of the lease or your landlord /seller could decide not to sell anymore. therefore, understanding the contract you made is very important.
2.You could be evicted
Depending on your contract, if you are unable to pay the house rent, your landlord could evict you thus making you lose the chance to buy the house as well as inevitably making you lose whatever payment you have made on the house with your rent. In addition, late payment of rent could mean you forfeit the payment towards the house for that month.
3.You might still have to get a loan
If you couldn’t raise the down payment before signing the lease. It is possible that you might still be unable to raise the down payment at the end of the lease, meaning you might still have to get a loan. This might be disadvantageous if a bad credit score (which could make you lose the loan) was the reason you were unable to make a down payment in the first place.
4.Prices might fall
The price of the house would be fixed at the beginning of the lease. This means even if the market prices of houses have fallen by the time you are ready to buy, you would still have to pay the agreed price, thereby losing you some money.
Rent to own homes can be both advantageous and disadvantageous to the buyer. In order to guard against the effects of the possible challenges listed here, it is best to know these problems and make plans that safeguard against them.