If you are looking at the different options for buying a home, then you will also want to know the process that is involved with the alternatives. The rent-to-own home process is one that differs from traditional mortgages, specifically because of the requirements and contractualagreements. The following steps are the most common options to follow when you are moving into a rental agreement.
The First Step in the Rent To Own Process
If you are under a rent to own home process, then you will begin with the phases that are designed for rental. During this phase, you will be given a contractual rent to own agreement that binds you to the home for one to three years. The agreement states that you will rent the home with an agreement to pay a monthly payment with a percentage of this going to the down payment of the home. The contractual agreement may also involve details such as maintenance solutions and alternatives when buying agreements begin.
The Transition Process
The rent to own home process moves into a transition after your contractual agreement ends. If you have the option to decide whether you want to purchase the home or not, then this is the time to move out. If you want to buy the home, then you will need to go through an approval process with a mortgage company to make sure that you qualify for a loan. While this is included in the initial rental agreement, there will be considerations that allow you to change mortgage dealers and alternatives for buying.
Purchase Your Home
The rent to own homes process ends with the ability to buy the home you are interested in. The transition point will end with a closing sale at which you will move into home ownership. The ownership agreement will be finalized into a document between a lender and your home that allows you to buy the home within a given period of time. By doing this, you will be able to move into home ownership while having the flexibility to rent first.
With the rent to own home process, you have the ability to build your credit, stabilize your location and your finances. The concepts that are involved at each phase are able to provide you with more options for moving in or staying with the rent to own agreement for as long as needed in your home.
Definitions For Rent To Own Homes
If you are working toward selling or buying a home and want to use lease option houses, then you will want to become familiar with the terminology. This will make the transaction easier while allowing you to get into the home that you desire with the obligations that fit your personal needs. Understanding what is available can provide you with the right options to move into your home with a lease to own home obligation.
There are some lease option houses that are obligatory to buy after the rental date. All others come with the option of buying the home after a specific timeframe. The call option is used when you want to buy the house before the rental agreement contract is through. This means that you have the right, but not the obligation, to buy the home before the lease is finished.
Rent To Own Homes Strike Price
Strike/Exercise Price: The strike price is the overall price that you will buy a home at. The lease option homes are available with a general alternative of how much the home is worth and how much you can buy it for. The strike price, also called the exercise price, is the amount that you can buy a home for with a complete purchase. If you don’t like the exercise price, then you can negotiate or try to find a different home.
Rent To Own Agreement Expiry Date
If you are living in a lease option house or looking at some of the options available, then you want to keep the expiry date in mind. After the expiry date, you can no longer lease or rent the property and will have to buy the home. If the expiry date is being used while the home is up for lease or purchase, then you will have the option to buy until the expiry date, at which point the home will immediately move into a lease agreement. With this option, you will want to find the home quickly and set your price before it goes into a lease-only option.
With lease option houses, you have the ability to lease or purchase the property that you are looking at. If you want to buy the home immediately, being familiar with the terminology is essential. If you are working on a lease to purchase alternative, then you will also want to be aware of the purchase options as well as what is included in the bidding process for homes so you can find the best deal when you are moving.