One of the first questions we get from potential tenant buyers of our local South Jersey New Jersey rent to own homes / lease option homes is “How do rent to Own Homes Work in South Jersey?”
Rent-to-own homes have become a popular choice for people who are trying to decide whether or not to buy a home as a result of the oversaturated real estate market, particularly after the bubble in the real estate market burst in the middle of the 2000s.
Both buyers and sellers can benefit from participating in a rent-to-own program.
For the seller, this means that they have consistent income to make consistent mortgage payments, and for the buyer, this means that they have a period of time—typically one or two years—during which they can organize their finances and secure financing to buy the house.
The Local Rent To Own House Process
Even though purchasing a home through renting one first and then eventually buying it outright is a straightforward process, many people find themselves perplexed by it.
There is a widespread misunderstanding that a renter can live in a home and pay rent for a period of 15, 20, or 30 years, at which point they will become the owner of the home. That does not quite capture the complexity of the situation.
But here are the basic elements of a rent to own agreement.
• The buyer and seller draw up an agreement, covering all terms of a rent-to-own agreement.
• This contract will state the monthly rent, and a set period of time.
• The renter will have the option to purchase the home at an agreed upon price at the expiration of the agreed upon time period.
The seller is able to continue making mortgage payments on the home even though they have moved out of the property by allowing a potential buyer an additional year or two to get their financial house in order before making a purchase decision. This is beneficial to the buyer because, if they are certain that they will be able to acquire financing, they can typically begin customizing the home to meet their needs and preferences. This is essentially the same as treating it as if you own the house (because you may own it someday!) and having that sense of home ownership while you are going through the process.
How Does The Monthly Rent Work With A South Jersey Rent To Own House?
In all honesty, it is dependent on the location of the house (there may be different laws that dictate what you can do in different states), as well as any new federal guidelines that may come out in the future that may limit what the property owner of a rent-to-own house may do with the house.
But the standard guidelines for a rent-to-own house are pretty simple.
- You agree on a rental rate and a future purchase price upon the end of the rental lease sometime in the future (usually 1-2 years).
- You first pay an upfront payment to move in and secure the contract and the terms with the option to buy. The “option fee” or “move in amount” may, in some cases, act as a percentage of the down payment on the home, should the renter decide to purchase at the end of the term. This may or may not be the case, depending on when and where you’re reading the article (based on laws). Connect with us directly for the local South Jersey New Jersey rent-to-own laws.
- You pay the monthly rent payment. This is no different from paying rent in any normal rental situation.
- At the end of the rent-to-own agreement (usually 1–3 years), You are the one who decides whether or not you want to buy the house at the price that was established at the beginning of the rent-to-own agreement. Fantastic news if you want to buy the house! We are able to assist you in meeting the requirements for a conventional loan so that you can purchase the property. There is no problem if you do not wish to purchase the property. The decision to purchase the home at the conclusion of a rent-to-own agreement in South Jersey or Philadelphia is entirely up to you; you are under no obligation to do so.
So, for the question of “how do rent-to-own homes work in South Jersey“… well, that’s the basic process.
Although there are many advantages to leasing with the option to buy a home in this area, every housing choice has both positives and negatives.
Just do your homework, talk to reputable and experienced companies like K&I Home Services LLC who can walk you through the local rent-to-own house process in [market city], and choose the option that will be best financially for you and your family.
Many people who choose rent-to-own arrangements may have had credit issues in the past, or they may simply be unsure about whether or not buying a home is the best option for them. Click the link below and fill out the form with your basic information to get on our rent to own home list for [market city]. If this describes you and you want to investigate the rent-to-own process and even see the rent-to-own or lease option houses that are currently available in the South Jersey and Philadelphia areas, then click the link below.
Many people in the United States are finding that rent-to-own homes give them the flexibility they need during this time of unpredictability in the housing market, as well as the opportunity to buy a home at the conclusion of the rental agreement. If you are able to gain an understanding of how rent-to-own homes operate, you will be in a position to take advantage of the many benefits of renting to own, and you will be able to realize the American dream despite any credit issues you may have had in the past.
Sign up below to see our latest Rent-to-own homes!