Owning a home is something that many people dream of. But the cost of buying a home can make it unattainable for some. Rent-to-own homes solve this problem by allowing tenants to purchase the property at some point in the future. However, you should know a few things about rent-to-own homes before signing the dotted line.

It’s a Great Way to Build Credit

Michigan rent to own programs give people who may struggle to qualify for a mortgage loan the opportunity to become homeowners. These homes offer buyers the option to purchase a home later and can provide them with time to improve their credit score, save for a down payment, and avoid private mortgage insurance (PMI).

Typically, if you rent to own a property, you’ll pay an upfront “option fee” that will be applied toward the future purchase price of the property. However, it’s important to understand your lease terms and research comparable properties to ensure you’re paying an appropriate price for the property.

It’s also a good idea to schedule a professional home inspection before signing an agreement. This will help you determine if the property needs any repairs and is worth purchasing at the agreed-upon price. You should also ensure the property taxes are up-to-date and the home’s title is lien-free.

It’s a Great Way to Save Money

Typically, when you rent to own a home, part of your monthly payment goes toward the future purchase price of the property. This can help you build equity in the property, which can be used as a down payment when you’re ready to buy it at the end of your lease.

However, it’s important to remember that you must make all your payments on time. You must make timely payments to ensure your agreement is valid, and you may lose some of the money applied toward your future purchase.

In addition, you’ll also need to secure a mortgage lender if you plan on buying the home at the end of your lease. Exploring various options and comparing rates is advisable to find the best deal. This can save you thousands of dollars.

It’s a Great Way to Build Equity

Home equity is the difference between your home’s value and the amount you owe on your mortgage. By making payments and improving your credit score, you can build equity in your home and eventually be able to purchase it. Buying a home can be expensive, especially with closing costs and down payment requirements. Renting can be a great way to avoid the large expenses of purchasing and moving while still building equity.

Rent-to-own programs, like those offered by companies such as https://www.michiganhomesellers.com/rent-to-own-program/, allow you to make monthly rental payments that contribute towards a down payment on the final purchase price of the property. These programs are also known as lease-purchase or option-to-buy programs. These agreements can help people struggling to qualify for a mortgage loan get a foot in the door.

To learn more about renting-to-own homes, speak with a real estate agent specializing in these properties. 

It’s A Great Way to Get a Foot in the Door

Rent-to-own homes can help you get a foot in the door if you are interested in homeownership but need the credit score or down payment required for a mortgage. Sometimes, a non-refundable option fee is paid upfront, and the remainder of your rent payments may be applied toward a future property purchase.

It’s important to read the lease agreement carefully before committing to buy a rent-to-own home. This will provide you with important details such as how the purchase price is determined (whether during the lease or closer to its end), how your option fee and rent payments may be used, and who will pay for utilities, maintenance, property taxes, and homeowners association fees, if applicable.

In addition, it’s important to remember that the rent-to-own contract allows you to improve your financial situation and credit during a set period. Those who are successful in making progress in building their credit, boosting their income, or paying down debt will be much more attractive to mortgage lenders at the end of the rental period.