Rent to Own - Pros and Cons to Buyers

Rent to Own advantages to Buyers

·         Buyers have time to accumulate money for down payment and repair their credit history as they rent the house.

·         Buyers can stay in their dream home today at the cost of renting it. No delay!

·         If the housing market collapses at the end of the term, buyers can walk away. Although the buyers will lose the original deposit and all their savings credit, the amount will be much less than if the buyer had bought the home outright and tried to sell it later.

·         At the end of the term, there won’t be any closing costs involved.

Rent to Own risks to Buyers

·         If the buyer is late on a month’s rent payment, even it’s one day late, most agreements void the savings credit for that month. Therefore, the buyer in the rent-to-own agreement must pay on time, every time.

·         Buyers still have to pay the upfront deposit. It’s usually 3% -5% of the agreed-upon selling price of the home and is often thousands of dollars. It may be difficult to accumulate that much money before renting although it goes to the down payment should the buyers decide to buy the home.

·         All those responsibilities and repairs are the responsibility of the buyer, even during the rental period. i.e. cut the grass, shovel snow or replace a stove.

·         At the end of the term, the buyer still may not be able to buy the home for various reasons: insufficient down payment, bad credits and/or unstable/not enough income.