One of the first questions, if not THE first question, we get from potential tenant buyers is “how do rent-to-own homes work in Colorado Springs?”
Rent-to-own homes have become a popular option for people who are deciding whether to purchase or rent a home, and they can offer advantages to both buyers and sellers.
For the sellers, they have a steady rental income to make their mortgage payments with, while the tenant buyer has a period, typically a year or two, to organize his or her finances, improve credit scores and thus be able to secure financing to buy the house.
THE LOCAL RENT TO OWN HOUSE PROCESS
The rent-to-own process is relatively straightforward, though many people find it confusing. The most common misconception is that the renter can live in the home and pay rent over a period of 15, 20 or even 30 years, and then own the home. It doesn’t quite work that way. The renter is actually a tenant buyer, and still must secure a mortgage after an agreed upon time frame to purchase the house.
HERE ARE THE BASICS OF A RENT-TO-OWN AGREEMENT
The buyer and seller draw up an agreement, covering all terms of a rent-to-own agreement, which includes the monthly rent, the agreed upon purchase price, and the term (usually 1 – 2 years)
At the expiration of the agreement, the tenant buyer has the option of purchasing the home at the agreed upon price. Of course, the home may be purchased sooner if financing can be secured.
By giving a potential buyer a year or two to get their financial house in order, the seller can continue to make mortgage payments on the home, while living elsewhere. This benefits the buyer(s) as they are working towards home ownership and if they begin to feel that they can acquire financing, they can usually begin to customize the home to meet their needs and preferences….essentially treating it like it’s their own home (because it may be someday!).
HOW DOES THE MONTHLY RENT WORK WITH A COLORADO SPRINGS RENT TO OWN HOUSE?
The standard guidelines are pretty simple.
- You agree on a rental rate and a future purchase price upon the end of the rent-to-own agreement sometime in the future (usually 1-2 years)
- You pay an upfront payment to move in and secure the contract and the terms with the option to buy. This “option fee” may in some cases act as part of the down payment on the home, should you decide to purchase at the end of the term. However, this may or may not be the case depending on the state you are in. Contact us directly for the local market Colorado 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, you decide if you want to proceed with the purchase of your home for the price initially agreed upon. If you want to buy the home, great! We can assist you in getting qualified for a traditional home loan, whether you require a VA, FHA or Conventional Loan. If you don’t want to buy that home, that’s fine, as you are under no obligation to buy the home at the end of the agreement. The choice is yours.
While there are lots of benefits to renting to own a home here in Colorado Springs, every housing option has its pros and cons.
Do your research and talk with reputable and experienced companies like ColoradoSpringsRenttoOwnHomes.com who can walk you through the Colorado Springs rent to own process. Then make the financial decision that’s best for you and your family.
Many people choosing rent-to-own may have past credit problems, or may just be unsure if purchasing a home at this point in time is right for them. If that’s you and you want to look into the rent to own process, and even see the current available rent-to-own houses here in the Colorado Springs market, click the link below and provide your basic information to get on our mailing list so that you are able to see new rent-to-own homes as they come on the market in Colorado Springs.
By understanding how rent-to-own homes work, you can position yourself to take advantage of the many benefits of renting to own, and realize the American Dream of homeownership, even with past credit problems.