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How Rent To Own Program Works
A rent-to-own program is a way for potential homebuyers to rent a property for a period of time with the option to buy the property at the end of the rental period. Here’s how it typically works:
- The renter and landlord (or property owner) agree to a rental period, usually between one to three years.
- The renter pays a non-refundable option fee at the beginning of the rental period, which gives them the option to purchase the property at the end of the rental period.
- The renter pays a monthly rent payment during the rental period, which is typically higher than a regular rental payment, as a portion of the payment goes towards building equity in the property.
- During the rental period, the renter has the opportunity to improve their credit score and save money for a down payment, which they will need when they exercise their option to buy the property.
- At the end of the rental period, the renter can choose to exercise their option to purchase the property at a predetermined price that was agreed upon at the beginning of the rental period. If they choose to exercise their option, the option fee and a portion of their rent payments will typically be credited towards the purchase price of the property.
It’s important to note that rent-to-own programs can have their own unique terms and conditions, and it’s important to carefully review and understand the terms of the program before entering into any agreement. It’s also a good idea to work with a real estate attorney or financial advisor to help you understand the financial implications of a rent-to-own program and ensure that the terms of the agreement are fair and reasonable.