Rent-to-Own at Cleveland Ohio Mortgage
What is Rent to Own?
There are similar terms used for rent-to-own. Other terms that are a little different, but similar are lease/option and land contract. However you describe this type of purchase, the components of a rent to own purchase are very similar.
With rent to own, you can have great, good, average, or poor credit history. You can have a bankruptcy, foreclosure, or absolutely horrible credit. Whatever your situation, the typical rent to own transaction will have several key components. The rent to own purchaser (a.k.a. tenant/buyer) will be required to pay 1%-5% of the total purchase price as a down payment (a.k.a. as an option payment or option consideration). This would go toward the purchase price of the home when they are ready to buy. It is important to keep in mind that this down payment is in lieu of a security deposit and generally will be non-refundable.
In addition to the down payment, the seller or landlord may offer rent credits that go toward the purchase price as well. This means, that part of your payment each month would go toward the purchase price of the home when the buyer is able to obtain mortgage financing and complete the purchase of the property. The amount of the rent credit and the down payment will vary from seller to seller and property to property.
With the downward spiral of the real estate market, sellers are starting to look at rent to own as a realistic option. Most sellers shy away from putting a rent to own person in their home because of the high percentage of buyers that do not turn over. In today's market, a lot of for sale by owner homes are resorting to putting a rent to own tenant in the home so they do no lose money leaving the house on the market.