What is Rent To Own?

A rent to own (also known as a lease option) is where you pay an upfront amount in return for the option to purchase the home you are renting at the end of the agreed upon time. In addition, you pay an additional amount each month that would be applied toward your down payment, should you exercise your option to purchase when the lease is up. The sale price is agreed upon upfront, along with the term of the lease and when the home needs to be purchased by. Aside from that, you are a Tenant under the terms of the lease you sign and must pay rent and follow the rental agreement.

For example:

• You pay $5,000 for the lease option on the home you plan to rent.

• The rent is $1900/mo, and you pay an additional $250/mo which goes toward your down payment.

• At the end of 2 years, you have $6000 toward your down payment to purchase the home. If you choose not to or are unable to purchase the home, the $6000 is retained by the Seller / Landlord and you have no obligation to move forward.

• If you do move forward, you obtain a mortgage just as if you were normally purchasing a home, and the closing takes place.

Rent to own is a great way to save and work on credit issues while enjoying the home you will eventually call your own.