20% of respondents in a recent survey said they'd never be able to pay for a down payment on a home. Another 30% said it would take them over five years.
Renting isn't much more affordable. Another survey found that 24% of renters can't afford rent.
What if there were a better, more affordable combination of the two? Read on to learn about rent-to-own homes in Orlando, FL.
What Are Rent-to-Own Homes?
Rent-to-own homes are rented out for a set period, typically one to five years. A portion of the rent goes towards an eventual down payment. You can then buy the property at a predetermined price.
A lease-option agreement lets you buy the home at the end of your lease period. Keep in mind that you're not obligated to.
A lease-purchase agreement does lock you into buying the home. If you can't, you'll lose your claim to the house, and the homeowner can sue you for breach of contract.
Pros and Cons of Rent-to-Own
The advantages of rent-to-own properties make them a great compromise. Keep their disadvantages in mind because they're not for everyone.
Pros
Rent-to-own homes let you live in your desired area and build up equity in the home.
Your rent reduces your final down payment, and you get extra time to save the rest and improve your credit.
You may also save money in other ways. Your landlord may cover expenses that you'd have to cover in a traditional house. These may include:
- Routine maintenance
- Closing costs
- Taxes
- Insurance
Cons
The rental rate may be higher for a rent-to-own property. The sale price may also be higher thanks to market fluctuation.
The lease is typically longer. You won't have the hassle of moving but could be stuck in a neighborhood or house you don't like.
Bowing out of a rent-to-own agreement costs you any rent money or option fee you paid. It can also cost you the chance to buy.
Rent-to-Own vs. Buying
One of the main reasons buyers choose rent-to-own properties is that they can't get approved for mortgages. They have stricter requirements surrounding:
- Credit scores
- Debt-to-income ratios
- Income consistencies
- Employment
Mortgages also require larger down payments. You can reduce this amount every time you pay rent in a rent-to-own home.
Traditional mortgages offer immediate ownership. The process also tends to be easier.
A rent-to-own with a lease-option agreement offers more flexibility. Try them if you're not sure you're buying your forever home.
How to Buy Rent-to-Own Properties
The rent-to-own process is similar to buying a home.
Find an agent and start searching online listings. Look over the lease agreement and negotiate a price with the owner.
Pay rent until it's time to buy, then apply for mortgages. Negotiate with the owner on a final purchase price.
Where to Find Rent-to-Own Homes in Orlando, FL
Rent-to-own homes are affordable options for those with poor credit or little savings for a down payment.
PMI Prime Home is a full-service real estate asset management company. You can see our dedication through our Prime Home property reviews. They come from a large selection of satisfied past clients.
Our goal is to help you find the best property for you, whether it's an investment or a home. Contact us to see how we can help you achieve your goals today.
