Rent To Own Agreement 2: Fill & Download for Free

1.) You need to understand what you agreed to in your lease purchase contract. Rent to Own agreements in Massachusetts are discussed here Rent to Own Homes in Massachusetts – How Does it Work?2.) Under no circumstances should you or anyone make leasehold improvements to a property where you don’t “hold the trigger” in making the purchase decision. Almost all lease purchase contracts fix the purchase price, the rental terms and leave the purchase discretion solely to the buyer.Sounds like you would be well advised to seek competent legal counsel specializing in real estate law.

Try saving more and working on your credit, and invest later2. Look at different loan options like owner-occupant/FHA loans, private money or hard money loans3. Try different methods of obtaining a property like trading, doing a rent-to-own agreement, partnering up with someone4. Look for rental properties that are in your budget; set your personal criteria, you might find some that will work well with your budgetRead more here: Buying Investment Properties With No Moneyand here: 9 Ways To Invest If You're Not Rich (Yet)

If you’re working on improving your credit score, saving up to afford a down payment or just making sure that you like the area you will be moving into before purchasing, rent to own is a good place to start.If you can purchase a property right now, you should, but not everyone has that luxury. If you’re deciding between renting and then buying another property at the end of your lease or renting to own, choose rent to own. The key difference between the two is that you pay an option fee at the beginning of a rent to own lease that gives you the option to purchase the property at or before the end of the lease. While you have the option to buy the property, the seller has the obligation to sell it to you. The seller cannot sell the property to anyone else unless you have not bought the property by the time the lease finishes. If you buy the property, you get that money back and can use it toward the down payment. If you do not buy the property, the seller keeps the option payment. For that reason, you should only rent to own if you know that you want to buy the home you are renting.That is the only difference that is inherently part of rent to own. There are other factors that you and the seller can negotiate that will change what you pay, but you do not need to include those in your rent to own agreement.Additionally, if at some point during the lease you are ready to buy the house, you’re not trapped in a lease like you would be through normal renting, you can just buy the house as soon as you are ready.Of course, it is important to do your research before making any decisions:Be sure you are signing a lease with option to buy, lease-option or rent with option to buy deal. A lease-purchase agreement is different. In a lease-purchase agreement you are obligated to buy the house, as opposed to being given the option to do so.Make sure the rent that you will pay the seller is fair market value.Make sure that fair market value is enough to cover the insurance and mortgage on the property that the seller is currently paying. You would not want the seller to foreclose on the property you are aiming to buy.Check the title on the home to make sure it belongs to the seller.Check the public records for the home and ensure there are no liens or overdue taxes on the home.Speak with a mortgage broker before signing anything. If you qualify for a mortgage or FHA loan, you should probably purchase a house instead. If you do not currently qualify, you should make sure that you are on the right track to qualify by the time your lease ends.Make sure the seller is putting your option fee, rent credits and/or premium payments into an escrow account. The escrow account can only be accessed by the seller once you have decided to purchase the home or not to purchase the home.Read through your contract and get everything in writing.Get a home inspection done…before you sign the lease! If you do not purchase this home, you will lose money. Go through all the necessary procedures that homebuyers go through now.While some might argue that there are risks associated with rent to own, the same risks are present when you purchase a property. If you don’t think you can make a rent payment long term, the same would be true of a mortgage payment. If you change jobs and need to move before you purchase a rent to own home, yes, you will lose your option fee, but you would lose money if you had to sell a home too. You would lose what you paid in closing fees and if you hire a realtor to sell the property, you would lose the money that goes to that realtor’s commission.Earlier, I mentioned additional costs that could come up in your negotiation with the seller. You and the seller can negotiate rent credits. There are three types of rent credits:Normal Rent Credits - you pay fair market rent each month. For every month you pay rent, the seller puts a percentage of the money you pay into an escrow account. If you buy the property you can use that money for the down payment. If you do not buy the property, the seller keeps it. This option makes rent to own cheaper than renting and then buying a home. It is a good deal to work out.Premium Payment Matching - You pay fair market rent each month and then an additional percentage of that rent as a premium payment. For each month you make a premium payment, the seller matches that payment with the same proportion of your fair market rent. Your payment and the matched payment go into an escrow account. You can use the money in that escrow account for the down payment on the home. Should you not buy the home, the seller keeps that money. If you’re sure you’re going to buy the property, this is a good option too. It also makes rent to own cheaper than renting and then buying. It is the middle of the road deal because you do need to put some of your own money in, which is a risk. If you do not buy the property you will lose that money.Premium Payments - You pay fair market rent each month and an additional percentage of the rent as a premium payment. The seller does not match your payment. Your premium payment goes into an escrow account. You can use the money in that account for the down payment on the home, but if you do not buy the home, the seller will keep it. This isn’t a good option for buyers as you could lose extra money. The only situation where this would be a good idea is if you’re using it to convince a seller that you will buy the home, you just need to rent it for a few months first. The extra money gives the seller peace of mind that you will buy the property. Otherwise, you should just save that money on your own and not put it in jeopardy.In sum: Rent to own is a good idea because it helps you save money to purchase a home. You could potentially save money on the home by using Rent Credits or Premium Payment Matching. Additionally, you will have built up equity in the home and a larger down payment, which is likely to bring down your interest rate. You’ve also had more time to improve your credit score, which also brings down your interest rate.