Is Renting To Own A House Really Worth It?
So you're wanting to buy a house. There comes a point in time when almost everyone gets to this stage in their life. Furthermore, in this day and age, there are so many ways to go about doing this confusing task. With options such as buying, renting, and renting to own, it's difficult to decide which option is the best choice. However, many enjoy the rent-to-own option. Who wouldn't want to make the already demanding monthly payments with ownership as the end result? However, choosing this option can come with many benefits and downsides alike. So, is it worth it? Let's break it down.
For starters, what exactly does it mean to rent-to-own, and how does it work? According to Rocket Mortgage, renting to own means signing an agreement to pay rent on a monthly basis, typically for several years, much like standard renting. However, in opposition to standard renting, after so many years of a rent-to-own agreement, the renter has the option to buy the home. However, the rent paid monthly is typically higher than normal rent amounts. This is because when the time comes for the renter to choose whether or not to purchase the home, the higher monthly rate acts as a deposit on the final purchasing costs.
Buyer beware
Like with any other thing in existence, there are many pros and cons to renting to own. Let's begin with the pros. In an attempt to point out the obvious, the biggest and perhaps most beneficial pro is the ownership of the home. After all, this was the goal the whole time, right? Secondly, according to Realtor.com, rent-to-own companies are less strict than most other standard lender companies. This means your chances of approval are higher for rent-to-own agreements as opposed to standard rental agreements. Even with a lower-than-average credit score, the chances of getting approved are still elevated.
Next, let's discuss the cons. One con mentioned earlier is the higher monthly rent costs. This can become a problem for those on a fixed or low income. Furthermore, if you choose to not purchase the home at the end of the agreement, you won't receive your money back for those extra payments, per Rocket Mortgage. Secondly, there's still a chance that you may not qualify for a loan when it comes time to purchase the property. If this is something you're wanting to do, it's crucial to make sure you have the money or a plan to purchase the property when the agreement ends.