what if i wanted out before paying off the whole price of the house, do I own any shares in the house? How do you determine the term of the lease required to own the place?
2006-12-07 07:49:40 · 9 answers · asked by ghadaa21 2 in Business & Finance ➔ Renting & Real Estate
Most rent to own homes work this way:
You pay rent to live there, plus you pay an extra amount each month which goes toward the purchase price. At any time that the owner choses to sell the house outright, you have what's called the "first right of refusal". This means that you are first in line to buy it if you can afford it. If not, then they either refund the extra that you have been paying toward it or they keep it as forfeit of earnest money.
Before entering into this situation, make sure that you have a written agreement stating what will happen to your extra money if you can't buy it, how long they will take the extra payments toward the house before they put it up for sale, and how much of your monthly payment is actually going toward the purchase price.
I have never heard of any owner giving up equity in their property to an outside individual. If nothing else, they will find a way to convert the money to theirs for repairs before selling the house to someone else.
Good luck and make sure that your butt is covered in writing.
2006-12-07 08:01:43 · answer #1 · answered by Goyo 6 · 0⤊ 0⤋
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2016-07-20 05:29:00 · answer #2 · answered by David 3 · 0⤊ 0⤋
Lease options vary from state to state and from contract to contract.
Typically you sign a lease and pay rent, a percentage of that rent is credited towards your eventual purchase of the home. (The percentage is negotiable so I'd suggest talker to either an agent or a RE lawyer for advice as to what is acceptable in your market.) This can vary, in some situations nothing is credited.
There may also be a fee called an option fee which could be anywhere from 1-2 (or more) months rent which you pay up front in order to be allowed to exercise the option. This money is typically non-refundable, but may be credited towards the eventual purchase of the home. (This is also negotiable.)
Finally you'll want to set in stone some sort of a purchase price, either based on an appraisal or market analysis. This way you're not surprised by some random number determined by the seller whenever you decide to call that option (be it a year from now or two.)
I always suggest getting advice from an agent or lawyer who knows the market.
2006-12-07 08:06:42 · answer #3 · answered by quick4_6 4 · 0⤊ 0⤋
On a rent to own situation, you are simply a tenant for the initial period. But you do basically have the first rights to purchase the property, after whatever time you negotiate.
You have zero ownership stake in the home until you complete the purchase and pay the current owner for the home.
Your lease/rent payments are NOT being applied to the purchase price. They are rent payments, not down payments. One exception would be that instead of paying $1200 per month, you pay $1500 per month, and $300/mo. is being applied as your down payment. But unless that is clearly spelled out in your lease contract, it's not what's happening.
Just make sure there's no type of penalty for you if, after the rent period, you can't qualify for a mortgage or just don't want to purchase the home anymore.
2006-12-07 08:02:33 · answer #4 · answered by Anonymous · 2⤊ 0⤋
Rent to own. You rent the property for a certain period of time. Part of your rent money will be put aside and added to your down payment for the property. This could take a year or two. Once you have acquired enough to put down, you can mortgage the place on your name. You will sign a contract stating that you will live in the house for a certain period of time until you decide to take over. This can be very complicated or simple. Remember owning a property is always better than renting one. For first time buyers or a couple getting out of financial difficulties this is a good way to get on your feet. To be sure about this whole thing I would speak to a property consultant, banker, or a mortgage broker.
2006-12-07 08:04:57 · answer #5 · answered by Anonymous · 0⤊ 0⤋
It depends on the terms stated in your contract. But generally it goes like this - a tenant will lease a property for a certain period of time (5 years for example) where within the said period, the tenant has the option to buy the property. If a tenant will opt to buy the property during the early stage of his lease contract, then a large percentage of the rents he had paid will be considered as downpayment for the purchase price of the house. If the tenant will opt to buy at the later stage of his term, then the percentage of the total rentals paid which will be credited as part of the purchase price wil be equitably reduced also. For example, if he opts to buy on the first year, 90% of the total rentals paid will be considered as downpayment for the purchase price. But if he opts to buy on the 5th year of the contract, then only 20% of the total rentals paid will be considered as downpayment of the purchase price. Now, if the tenant failed to exercise his option to purchase the property after the end of the term of his contract, then all his payments would only be considered as rentals for his stay on the property and he loses the option to purchase the same. The owner can now offer the said property to other persons...Hope this is a big help
2006-12-07 13:13:15 · answer #6 · answered by mae 1 · 0⤊ 0⤋
i think its just like renting a house, if you move out u dnt get any share of it becaue u had the chance to rent to own n u chose to move out..therefore u still paid to live there(u cant live free unless u live in a cardboard box).... As far as how to determine how the term of leasing it would b say as an example(easy to explaion n understand)...u bought a house for 1000.00 you could pay $50 a month for 20 months plus your own bills u agree between the current owner and yourself how long you would like to pay and by that they take thier asking price and divide it by the number of months uw ana pay, that number would b how much u would be payin on top of your bills.
good luck, and remember get EVERYTHING ON PAPER!
2006-12-07 07:56:41 · answer #7 · answered by Anonymous · 1⤊ 1⤋
Rent-To-Own Homes : http://RentToOwnHome.uzaev.com/?rJxS
2016-07-13 04:21:36 · answer #8 · answered by Bettie 3 · 0⤊ 0⤋
usually you rent for a period of time and a percentage of your rent money goes toward your down payment. When your ready for settlement you will also have a couple of hundren more to go along with that for your closing cost. Talk to a banker
2006-12-07 07:56:04 · answer #9 · answered by short 2 · 0⤊ 0⤋