Which means you are sick of renting. You would like to own your own house, but you do not have much of a downpayment. Without doubt you’ve probably heard of “the perfect solution” – rent to own. But is it really as perfect as everyone says – hardly. There are some secrets about rent to possess properties you will want to be familiar with. These are most overlooked facets of a rent to own deal. So let us understand the truth about lease to obtain homes.
How Rent to have Works
Very first how it operates. You’re renting a home using the choice to buy. You will have lease that may typically last between 2 to 3 years. Owner will likely require that you put some form of upfront advance payment or option fee. This is usually 1 to 7 percent from the arranged purchase price. Besides the rent, you will pay what is known as a Rent Premium or Rent Credit. This extra amounts put towards final cost of your home.
Let’s see that the Salt Lake City, Utah rent to own would work 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 towards the purchase is negotiable. Generally you are very likely to pay 20 to 50% across the market rent. With regard to argument, let’s choose 25% that’s about average. So you’ll pay $1,500 monthly in rent with an additional $375 on the purchase. In case your lease lasts Several years, you’d have a very rent credit inside the level of $13,500. Median home in Salt Lake City are $280,000. Should you paid a 3% option fee of $8,400 and combined by using the rent credit, you would end up with a advance payment of $21,900 or 7.8%. So good.
The reality regarding buy calculator
Would you like to have in mind the dirty little secret few buyers inside your position realize? In case you choose that you might be unable or hesitant to buy the house at the end of the lease agreement, you forfeit Each of the money you have paid. That also includes the Rent Premium and also the option fee. Gone. The entire thing. The vendor keeps all the money so you arrive at call a moving van and commence across.
You would be surprised how many times such things happen. The buyer might run into some difficulties with your home and they also want out. Money lost. The customer will not be able to be entitled to a mortgage. Money lost. Or, imagine that the seller doesn’t spend the money for mortgage along with the property gets foreclosed on. Yikes! Money lost.
So, before you race to snap up the closest rent to own or lease option property, be sure to do your due diligence and also have the house inspected. Begin working which has a lender in order to qualify for home financing and then for goodness sake, ensure you love your home.
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