Understanding Rent-to-Own Homes: A Comprehensive Overview by Priority 1 LendingVerify my mortgage eligibility (Dec 9th, 2023)
Priority 1 Lending, a leading mortgage company, is committed to providing you with in-depth insights about various home-buying options. In this article, we’ll explore the concept of rent-to-own homes and how it works.
Rent-to-Own Homes: How Do They Work?
Rent-to-own agreements, also known as lease-to-own or lease-purchase contracts, offer an alternative path to homeownership. This arrangement allows potential buyers to rent a home with an option to buy it after a specified period.Verify my mortgage eligibility (Dec 9th, 2023)
1. Understanding the Lease Agreement:
The lease agreement in a rent-to-own contract is similar to a standard rental lease, with one significant exception - the addition of an option to purchase the home at the end of the lease. The lease period typically ranges between one to three years.
2. Option Fee and Rent Premium:Verify my mortgage eligibility (Dec 9th, 2023)
In a rent-to-own agreement, potential buyers often pay an upfront option fee. This fee secures the right to purchase the home later and typically ranges from 2-7% of the anticipated purchase price. Moreover, a portion of the monthly rent, called a rent premium, is also applied toward the future purchase.
3. Purchase Agreement:
At the end of the lease period, if the tenant decides to buy the house, the option fee and the accumulated rent premiums serve as a down payment. The remaining balance is financed like a traditional home purchase.Verify my mortgage eligibility (Dec 9th, 2023)
Expert Guidance from Priority 1 Lending
Priority 1 Lending focuses on offering reliable information about different paths to homeownership. Our experienced team can guide you through various real estate terms, contracts, and financing options to help you make well-informed decisions.
At Priority 1 Lending, we’re here to demystify the home-buying process. Whether you’re considering a rent-to-own agreement or traditional home purchase, we strive to provide the knowledge and resources you need.
Whether you’re a first-time homebuyer or a seasoned homeowner, Priority 1 Lending is ready to assist. Let us be your trusted partner on your journey to homeownership. From understanding rent-to-own homes to finalizing the best mortgage option for you, we’re with you every step of the way.Show me today's rates (Dec 9th, 2023)