Rent to own a house is also called lease to own house (or a whole slew of other phrases… like “lease option”, etc.).
So how does rent to own homes work in Clarksville and other parts of Tennessee?
How Does A Rent To Own Home Agreement Work?It is kind of similar to a car lease.
In this kind of arrangement, the renter rents a house from the owner of the house and pays monthly rental fees for living in the house. After a given period of time, usually three years, the renter can decide to purchase the house at a price that the renter and owner of the house agreed upon at the start of the rent to own agreement.
Of the monthly rent paid to the owner, a fraction can sometimes go towards down payment of the house depending on the local laws and guidelines. Sometimes applying part of the monthly rent to the purchase price is now against the law because of a law passed by Congress called the Dodd Frank Law.
The Rent To Own Contract Agreement – How It Works Here In Clarksville
The contract the buyer and seller draw up should be very clear. You should understand the nature and terms of the contract properly before signing it. Make sure you ask the seller lots of questions if you’re not clear about anything at all.
This arrangement has got advantages for both sellers and buyers alike… but also some huge benefits. So understand both the pros and cons so you can make a great decision for you and your family.
The Financial Parts Of The Rent To Own Agreement
First, the seller has to set the purchase price and monthly rent for the house.
The Monthly Rent
The purchase price is usually retail value for the house in today’s market. The monthly rent is usually a bit higher with a rent to own / lease option agreement than if you were to just rent a house normally.
Because you’re paying for the ability to purchase that house at the end of the agreement and you’re locking that house down so others can’t purchase or rent it during the entire term of the agreement.
The Purchase Price
The agreed and signed price and rent is settled and locked during the entire rental period of time, which is usually between one and three years.
The agreed price doesn’t change during the agreement based on market prices in Clarksville, whether they rise or fall. That’s one of the big benefits of buying a house here in Clarksville with a rent to own… that you can lock in to buy a house at a price today… and not have to buy the house for 1 – 3 years… and that purchase price won’t go up over those years.
The Option Fee / Upfront Payment
There is an option fee that the buyer pays the seller. It is a set amount of money payable to the seller by the buyer before you move into the house. This amount can really vary based on who you’re working with and the house price… but a rule of thumb is usually 3-5% of the total house purchase price is what you can expect to pay upfront to enter the agreement… and this payment is non-refundable if you decide to NOT buy the house at the end of the agreement.
This option of buying a house in Clarksville with a rent to own agreement is very good for buyers who would otherwise be unable to purchase a house or whose credit score wouldn’t meet the required threshold for a mortgage.
For sellers like us, the rent to own opens up the potential “buyers pool” so we can help more people get into great homes.
For buyers, it lets you work toward home ownership and have that sense of pride you feel when you own a home.
For the full article here is the link:
Share the video to your friends: Y