Buying a rent to own home in Metro Detroit will help you purchase your dream home, even if you aren’t quite ready today. In our latest post, we will offer guidance on what you can expect during the process so you don’t find yourself stuck with any surprises.
Smart sellers all over the Metro Detroit area are discovering how selling via a rent to own contract can be beneficial for both buyers and sellers. By using a rent to own contract, the seller opens up the door to all kinds of new potential buyers. In turn, buyers will be able to put down roots, with time to save up and restore their credit. The risks of a rent to own agreement are often highlighted, but when all goes to plan, the process can be beneficial for everyone involved.
How It Works
The terms of a rent to own contract can vary based on what is agreed upon by the buyer and seller. That said, the general process is pretty standard. The buyer and seller will enter into an agreement stating the tenant will lease the house for a specific period of time, purchasing the property outright once the lease is up. While any amount of time may be agreed upon, the tenant will usually rent for about 2 years. This allows the buyer time to prepare financially. and get their credit in order if needed. If you aren’t confident you will be able to do this in the two years provided, a rent to own contract isn’t for you. However, if you are confident you will be able to buy at the end of the lease, a rent to own contract may be very beneficial for you in the long run.
During the rental period, the tenant will usually pay an increased rent, with a portion of it going toward the down payment on the home. There will be a payment upfront to secure the tenants intent to purchase the home. If they should default, the owner will be able to keep the deposit and increased rent paid. If the tenant should fulfill their lease obligation, they will then be able to buy the house at the predetermined price. Most of the time, prices are agreed upon before the lease is signed. This can be beneficial for you should the market go up before the sale is final.
Pros and Cons
While buying a rent to own property is the perfect choice for some buyers, others will experience disappointment at their inability to qualify for a traditional mortgage right away. There are many other pros and cons too, including…
- You’ll have a sense of pride knowing that someday soon, that house will be yours
- You will have a chance to save money and repair your credit
- You’ll be able to begin putting down roots right away
- You won’t miss out on the home of your dreams
- You’ll build equity instead of just renting
- Locking in today’s price will save you money
- You might be paying higher than average rent
- Something could go wrong with the house after you move in
All in all, using a rent to own contract to buy a house in Metro Detroit can be beneficial to both the buyer and seller. Before signing any contracts, make sure all the details are covered. You’ll want to include contingencies in case something goes majorly wrong with the home. You don’t want to be obligated to buy a house with mold problems or something similar.