As you may have read or heard in the news, the housing market is reaching a peak not seen since the Great Recession. With low interest rates, low inventory, and bidding wars, it is incredibly difficult to find a home that you can afford. It is very expensive looking for a house right now, with the interest rates going up and the criteria stricter than in years past. Saving for a down payment and having an adequate job with good credit history is an uphill battle when approaching a lender for a mortgage. 

You may have reached the point of giving up and just continuing to rent or live with friends and family. There is an alternative solution that could be beneficial to you and that alternative is rent to own homes. 

So many people qualify for rent to own homes, so before going any further, you should click here and begin your journey to becoming a home owner.

Now, let’s talk about how and when you can lock in your rent to own home price.

Locking in a Price for Your Rent to Own Home: How and When

A rent to own home agreement is a lease agreement with a stipulation that you will have the right to purchase the property at the end of the rental period. A portion of your rent will go toward your equity and the future down payment of the house. 

This sort of contract allows you to pay down the upfront cost of purchasing a home that would not be offered to you through a traditional mortgage lender. It also gives you time to build your credit score and pay down any outstanding debt that would make you a less-than-ideal candidate. 

One question that is asked a lot when it comes to rent-to-own is how and when a purchase price is decided on and locked in. 

Most rent-to-own home contracts will be determined at the start of the lease agreement process. There are exceptions and flexibilities with this process, but it is likely that you and the seller will negotiate the price of the property before you sign any contracts. This price is based on the property’s present or predicted value, depending on what the seller believes the house will be worth at the end of the lease terms (1-5 years from now). 

One important factor is getting into the best rent to own home for your situation. Click here to be sure that you’re getting the best rent to own home possible.

So if the seller thinks that through renovation, repairs, and the market predictions that the house will be worth thousands of dollars more in two years, they will want to lock into that price now and you will be obligated to pay it even if the predictions are wrong. However, if you and the seller opt to agree on a purchase price at a later date, it won’t be set in stone. 

One of the many benefits of buying a rent-to-own home is that everything is negotiable. Rent-to-own homes are much less regulated than other home buying contracts. There is no standard rent-to-own contract as everyone’s situation is different and everything is dependent on the terms decided between the buyer and the seller. 

That said, it is very important to review everything in the contract before you sign it. It is highly advised that you consult a real estate agent and/or an attorney to go over the terms and clauses so you know exactly what you will be signing. 

Remember: this contract is unique to you and you alone! Make sure that you know who will be responsible for repairs and taxes, if your pets are allowed, and if you are legally obligated to purchase the property at the end lease, even if you don’t qualify for a mortgage loan.