September 20
Why Rent-to-Own?
Rent-to-Own can be a confusing arena to enter and navigate through. But if you approach it right, you can end up with an ideal situation where you have all the time you need to get qualified while still living in your dream home today.
Here’s what you need to know about why Rent-to-Own may be precisely what you’re looking for.
Our priority is to help people achieve their financial dreams through the power of homeownership. One method consumers use to become homeowners is RTO or Rent-to-Own. In the right situation, Rent-to-Own can be a perfect arrangement, but it depends on your personal goals and circumstances.
There are aspects of the deal to keep in mind when questioning whether RTO suits you.
What is Rent-to-Own?
Rent-to-Own consists of two separate agreements between you and a home seller. The first is a standard lease agreement similar to other rental contracts you have been a part of. The second is an agreement that you are the first in line to buy the property once the contract concludes. In a nutshell, this means that you will live in the home while you prepare to purchase it.
When you enter an RTO, you usually will arrange to pay extra rent in exchange for a lower down payment when the purchasing option arrives. The bad news is that if you decide not to buy when the contract ends, you will be out all the extra rent you have been paying.
Another potential issue with RTO is that you have only one option of which home to buy after you become qualified.
For those who want options RTO is not the way to go.
Is Rent-to-Own Right For You?
So when does RTO work?
RTO works most efficiently when the seller and buyer have reasons to use this structure. Even then, it will only work if you fully understand where you’re at in the home buying process and the ins and outs of the agreement itself.
This begs the question, when is RTO right for you?
Suppose you are actively progressing through your journey of purchasing a home but urgently need a place to live. In that case, RTO may be right for you as you could move in immediately after making the agreement instead of waiting until you qualify for a mortgage.
Another situation where RTO would be your best bet is if you are currently renting a house in the process of being sold. Here you have a previously established relationship with the buyer, so you are much more likely to have success.
Now that you understand when RTO might work for you let’s look at when it might work for the seller. This way, you can better optimize your search for an RTO deal.
A seller may enter into an RTO for many reasons, and just because they don’t check all the boxes doesn’t mean they will automatically say no. That being said, some circumstances will make a listing likely to be open to RTO.
One reason a seller may enter an RTO is that their home is taking too long to sell. They also may be unable to get a reasonable price on the house in the current market. Maybe they are just trying to save equity or keep the property as an investment in the short term.
As a buyer, it is essential to remember to stick to your home ownership goals. Even if several sellers turn you down, continuing with your plan is crucial.
If you keep in mind what you learned about the value of RTO and when it works best, then you will be able to find an agreement that meets all of your needs.
Follow the Guide
What you’ve learned about Rent-to-Own may leave you wondering, is Rent-to-Own even worth it?
All of this may sound scary and paint a picture of RTO as sketchy. This is not the case, and RTO can be an excellent option for prospective home buyers as long as it’s correctly implemented.
If RTO is right for you, how do you proceed?
You follow the guide!
Our RTO Guide is a comprehensive step-by-step guide on how to accomplish any goal relating to RTO! In this guide, you will learn how typical RTO contracts work, how to protect yourself by using an RTO contract, and the ultimate goal, to secure your home by being ready to purchase it when the time comes.
Curious About RTO?
Let us show you how to use Rent-to-Own to find a great deal for your home.
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Find out if RTO is right for you! Take our short quiz to find out!
Check out our RTO Quickstart for a comprehensive breakdown of the process!