And that means you are fed up with renting. You want to own your own home, but you do not have access to a great deal of advance payment. No doubt you’ve probably heard of “the perfect solution” – rent to have. But is it really as perfect as everyone says – hardly. There are a few secrets about rent to possess properties you will want to learn about. They may be most overlooked areas of a rent to have deal. So why don’t we get the truth about lease to obtain homes.
How Rent to have Works
Very first the way it operates. You’re renting a property using the option to buy. You will have lease which will typically last between 2-3 years. The seller will likely expect you to put some form of upfront down payment or option fee. This is usually 1 to 7 % in the agreed upon final cost. Besides the rent, you will be paying what is called a Rent Premium or Rent Credit. This extra amounts put for the purchase price of the home.
Let’s examine how a Salt Lake City, Utah rent to possess works out. As of January, 2017 the median rent to get a 3 bedroom, 2 bath house in Salt Lake City is $1,500. The actual additional amount that you will pay for the purchase is negotiable. Generally you should expect to cover 20 to 50% higher than the market rent. With regard to argument, let’s go with 25% that’s about average. So you’ll pay $1,500 30 days in rent as well as an additional $375 towards purchase. If the lease lasts Three years, you’d use a rent credit in the amount of $13,500. Median home values in Salt Lake City are $280,000. In case you paid a 3% option fee of $8,400 and combined by purchasing the rent credit, you’d probably get a down payment of $21,900 or 7.8%. Not bad.
The Truth about rent vs buy home
Would you like to be aware of dirty little secret few buyers within your position realize? In the event you think that you might be unable or not wanting to find the house at the end of the lease agreement, you forfeit ALL of the money you have paid. Which includes the Rent Premium along with the option fee. Gone. Everything. The seller keeps the cash and you also get to call a moving van and initiate all over.
Selecting surprised how often this happens. The client may run into some difficulty with your home and they also want out. Money lost. The purchaser will not be able to be entitled to a mortgage. Money lost. Or, think the seller does not pay for the mortgage along with the property gets foreclosed on. Yikes! Money lost.
So, when you race to snap up the closest rent to own or lease option property, make sure you do your homework and also have the house inspected. Begin working which has a lender as a way to be entitled to a mortgage as well as goodness sake, ensure you really enjoy the house.
Check out about cheap rent to own homes just go to our new web portal: this site