Which means you are sick of renting. You want to own your own house, but you do donrrrt you have much of a down payment. No doubt you’ve probably heard of “the perfect solution” – rent to own. But is it really as perfect as everyone says – hardly. There are some secrets about rent to own properties you need to know about. They may be most overlooked elements of a rent to own deal. So let’s understand the truth about lease to possess homes.
How Rent to possess Works
Thus, making this the way it operates. You are renting a residence using the replacement for buy. You will find a lease that can typically last between 2-3 years. The owner will likely require that you put some kind of upfront advance payment or option fee. Normally, this is 1 to 7 percent in the arranged purchase price. Besides the rent, payable what is known a Rent Premium or Rent Credit. This extra amounts put towards the cost of the home.
Let’s see the way a Salt Lake City, Utah rent to have is acceptable out. Since January, 2017 the median rent for a 3 bedroom, 2 bath house in Salt Lake City is $1,500. Currently the additional amount you will pay towards purchase is negotiable. Generally you should expect to pay 20 to 50% over the market rent. In the interest of argument, let’s opt for 25% which can be about average. So you’ll pay $1,500 a month in rent plus an additional $375 towards purchase. If the lease lasts 3 years, you’ll have a very rent credit inside the level of $13,500. Median house values in Salt Lake City are $280,000. If you paid a 3% option fee of $8,400 and combined by investing in the rent credit, you’d probably have a deposit of $21,900 or 7.8%. Pretty good.
The real truth about rent to own homes
Do you want to be aware of dirty little secret few buyers within your position realize? Should you determine that you’re unable or unwilling to find the house following the lease agreement, you forfeit Each of the money that. That also includes the Rent Premium along with the option fee. Gone. The entire thing. Owner keeps the money and you also get to call a moving van and start all over.
You’d be surprised how many times this occurs. The customer may run into some issues with the home and so they want out. Money lost. The customer might not be able to be eligible for a a mortgage. Money lost. Or, imagine that the seller fails to pay for the mortgage as well as the property gets foreclosed on. Yikes! Money lost.
So, before you decide to race to snap in the closest rent to own or lease option property, ensure you do your required research and have the house inspected. Take effect having a lender in order to be entitled to a mortgage as well as goodness sake, make sure you really enjoy the home.
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