| Finding a rent-to-own house is one of the many ways | | | | loan for it. If you look at how much money goes to |
| someone with bad or no | | | | the principal payment of a home |
| credit can buy a house. You will often find them called | | | | with a typical mortgage loan, you will find that most of |
| names like lease/options, lease with option to buy, | | | | your mortgage payment in |
| lease purchase, lease 2 purchase, rent with option to | | | | the beginning is just paying interest on the loan. A rent |
| buy, rent to own, or rent to buy homes.There are a | | | | to own agreement, where |
| few differences between rent-to-own and | | | | the money goes directly to the payment of the home, |
| lease-option agreements, | | | | could be saving you a lot of |
| although many people use the terms interchangeably. | | | | money in the long run.With a lease-with-option-to-buy, |
| With a rent to own (or rent to | | | | a renter signs a lease agreement (often for a |
| buy) home, the buyer makes an agreement with the | | | | shorter period of time, like1-2 years, but it could be |
| owner that part or all of the rent | | | | longer). The renter/buyer |
| money will go towards the down payment of the | | | | usually pays a sum in cash, usually non-refundable, to |
| home, and at a certain date, | | | | the owner in agreement to |
| perhaps 2-5 years in the future, the renter will | | | | buy the house at a later date for the price agreed |
| purchase the home, using the money | | | | upon. The renter has the option or |
| that was set aside as the down payment.There is | | | | right to buy the home, so in the end they have a |
| usually not much money put down in the beginning, | | | | choice and can back out it they |
| outside of what would | | | | want. Some of the rent paid may or may not go |
| normally be needed for a rental home, so this is a | | | | towards the purchase price of the |
| good way to get into a home for | | | | home.This is a technique often used by real estate |
| little or no down payment.Another advantage to a | | | | investors in periods when the interest |
| rent to buy situation is that if you compare how much | | | | rate is rising fast. This way they hope to buy the |
| rent | | | | home at a lower interest rate on a |
| money is applied monthly to the home price, even if it | | | | later date. In the meantime, they will sublease the |
| is only 25-50%, it will still be | | | | home to someone else, who will |
| much more money paid on the principal of the house | | | | make the payments for them. |
| than if you had taken out a | | | | |