Why Rent-to-Own Is a Good Option for Some Buyers

If you are planning to purchase a home, but have limited funds or credit challenges, a rent-to-own option may be the best way to go.

A rent-to-own option, also known as a land contract, has many benefits, some of which can include the application of some of your rent money toward a down payment, some type of seller credit at closing or a financial goal to strive for while you move toward the purchase of the property.

Another benefit is that there would unlikely be a commissioned real estate agent involved, meaning that the seller/landlord can pass that savings on to you.

By working with your mortgage professional, you can set a course of action so that you’ll be ready to go when the time comes to purchase the property.

This preparation may include the paying off, or paying down, specific debt to get your financial ratios in line with lender guidelines.

Another reason to hold off on the purchase of a property might be for some type of credit repair or restoration, allowing you to either qualify for a mortgage or qualify for a lower interest rate after specific steps are taken.

Contacting a local real estate agent to get a value on the property before signing a contract is a good idea, as your lender will send out an appraiser during the application process before lending money on it, and you want to make sure that your purchase price is in line with what the market will bear.

Always make sure that you have your attorney look at any contract and financing paperwork before you sign.