Purchasing a home requires a solid credit score, qualifying for a mortgage, and cash to make a down payment. Fortunately, acquiring a rent-to-own home comes without all those requirements. Rent to own agreement involves signing a lease dictating the period for renting the property with an option to purchase it on expiry. This is not like regular rental agreements. Making the most out of a rent-to-own deal requires taking steps to ensure that it makes sense before putting pen to paper.
Tips to make a rent-to-buy deal work for you
Don’t just sign
It is very important to understand clearly what you are signing. Ensure to read through the agreement countless times before putting pen to paper. The lease agreement should have an option to purchase the property after expiry. Make sure that you are not signing an agreement with mandatory lease purchase terms. You need the freedom to choose whether to purchase the property or not at the end of the lease.
Understand the market
Before taking the plunge, study the property market. With the rise of rent-to-buy properties in Canada, there is a chance to land a desirable property at a great bargain. All it takes is locating a home that you can afford. When selecting a home, choose one you will love for years in an ideal location. Part of studying the property market should include market trends to determine the appropriate moment to take the plunge. Hesitation might make you pay for more in the future.
Investing in rent to buy homes in Canada requires making a down payment about 3 to 5 percent of the agreed purchase price. Fortunately, this contributes to the down payment for the property when you decide to buy it. However, this is not refunded when you opt not to purchase the home. So, be sure to afford to lose this amount when opting for a rent-to-own deal.
Additionally, the deal entails paying above average for renting the property. This extra amount contributes to the down payment when you purchase the property. Making the most of this deal requires having the capacity to cover the monthly portion. Being late on making payments might make you forfeit the extra amount. Additionally, you risk having the agreement terminated leading to loss of money you have already invested.
Inspect the property
Buying a home requires a thorough inspection. What you see on the property listings might not turn out to be what is actually on the ground. Take time to visit the home with a professional inspector. Hiring a professional is very important because you obviously know little about various aspects of a home. The inspector will inspect all corners of the property and make a report with recommendations.
This allows for discovering good and bad things about the property before signing the agreement. Check whether the property is a foreclosure to avoid losing your hard-earned money when the back comes to claim it. This requires assistance from a reputable realtor who understands property laws better.
Mind the agreement terms
The ideal rent-to-buy contract is tailored to leave the buyer and the seller happy. Take to go through the details thoroughly. This allows for understanding responsibility for paying general property maintenance costs. Keep in mind that this contract might include things that the landlord might not cover in a regular rental contract. Understanding the contract terms allows avoiding misunderstandings in the future.
Opting for rent-to-buy homes comes with endless advantages. You get time to build or restore your credit score before applying for a loan. This is through saving money when making the down payment. The most significant benefit of a rent-to-own home is getting time to test drive the home before actually purchasing it. By the time the lease expires, you are likely to have noticed the noisy neighbors, traffic patterns, and rampant burglaries.
If the house matches your ideal home, then you can go ahead and purchase it. Keep in mind that you already made a part payment on the total cost. Opting to purchase the house after the lease expires saves money you would have used during the moving process. This saves your valuable items from exposure to damage that might occur in the midst of the relocation.
Owning a home is one of the most significant investments to make in life. The obvious way to acquire your own home is having a solid credit score, mortgage, and enough cash to make the down payment. Luckily, you can own home when the lease expires with an option to purchase. This is the easiest and cheapest way of purchasing a home. You only have to make a small portion of the total cost before renting the property. And, you get a chance to test drive the property before deciding whether to purchase it or not.