When the lodging market is down , both buy and sell a home can be challenge . Buyers find it unmanageable to gather the John Cash necessary for a down payment and they ca n’t get enough credit to fasten a mortgage . vendor , on the other handwriting , often palpate pressured to deal their place at a loss because they ca n’t give two mortgages at once . Therefore , the option of economic rent - to - own property is an idealistic compromise , which benefit both the emptor and the seller .
In a rent - to - own arrangement , the tenant rent the prop for a specific number of years at a fixed rental price with the alternative to buy the home at the end of the lease menstruation . The renter has to pay a exclusive option fee upfront and a monthly rent premium on top of the rental toll . The money collect from the monthly rent premium and the choice fee gets accredit toward a down defrayal if he eventually decides to buy the place . If the term of a contract is up and the tenant chooses not to purchase the property , either because he find the property faulty or because he is still not eligible for a mortgage , the money he put toward the down requital gets forfeited .
The vantage of the rent - to - own transcription is that the trafficker makes money to cover his second mortgage while waiting for his prop to sell . Even in the worst - case scenario , where the renter chooses not to purchase the attribute , the marketer still comes out onwards by keeping the option fee . Buyers have the advantage of superfluous time to cumulate funds and mention ask for purchase the property . They can also check out the firm thoroughly over the course of the lease period to be absolutely certain the dimension is in respectable condition before investing additional money .
