Rent-to-Own Down Payment
Updated: Jul 18, 2018
Buying a home is a great long-term investment. Unfortunately, just buying a home for most people is not that simple. Before the market crash in ’08, it used to be relatively easy to get a loan for a home. Every bank in the country was lending money to people that did not qualify, and we all saw how that turned out in the end. Since then, however, the standards for lending have become much tighter. While that can be a good thing on the one hand, on the other, it puts more of a strain on those who are right on the cusp of being able to buy and have now had to put off buying for a few years.
If part of that strain on buying is worrying about being able to lump up enough money for a down payment, then you might want to consider a rent-to-own home. Rent to own home can have a different down payment requirement than a traditional mortgage depending on the seller. If you are tired of spending your hard earned money every month on rent without anything to show for it, then you should take a good look at rent-to-own properties. Rent-to-own or lease-option contracts are just an alternative way to buy a home. The owner of the house allows the tenant to live in the house and pay rent for three-five years then buy the home. The renter doesn’t have to move again and takes on a mortgage to pay for the home after the lease period is over.
There are quite a few advantages of getting into a rent-to-own home.
Low Down Payment Instead of paying the high priced twenty percent down payment when buying a home the traditional way, a rent-to-own home down payment is typically just three to five percent of the home value.
Easy to Qualify Qualifying for a rent-to-own is entirely up to the owner of the property, so there are no banks to go through for qualification.
Lock in the Price Home value is locked in at the time you sign the contract, so if the market has increased during the lease period, the price of the home stays the same.
Build Equity Immediately A portion of your rent goes to the down payment, closing cost, or the purchase price of the home, so you start earning equity right away without just throwing your rent money out the window.
No PMI With a rent-to-own home, you will not have to pay the monthly Private Mortgage Insurance (PMI), which can cost you a few hundred dollars a month.
No Property Taxes Property taxes are not paid by the tenant during the lease period, saving you thousands of dollars.
We have a great selection of rent-to-own homes available within Alabama so go ahead and take a look at your future home today.