Is Rent To Own For Me?

Is rent to own for me?

It's a personal decision

The question of whether or not to consider rent to own depends on your individual circumstance. As you saw in how rent to own works, rent to own is typically more expensive than renting. So when does rent to own makes sense for you? Here are some situations where it might:

You don't qualify for traditional mortgage now, but will soon

If you qualify for traditional mortgage today, you probably don't need Rent to Own. You'd just buy the home with mortgage financing. On the other hand, if you don't have a clear path to getting qualified for mortgage in the foreseeable future, renting would be a better option for you. But if you are well on your way to qualify for mortgage within a few years, but want the stability and benefits of home-ownership now, rent to own might be an option for you. In such case, think of rent to own as a "bridge financing" before acquiring mortgage financing.

Your working to improve your credit

Let's say you have a less than optimal credit score. Maybe you couldn't pay medical bills; maybe you went through a divorce, or a job loss. No matter the reason, your credit score is less than what the mortgage lenders require, and you don't qualify for traditional home loan... today. If you have good income and have (or will soon have) down-payment ready, rent to own might get you in your long-term home now while you work on improving your credit.

You want the stability of long term home

Even if your circumstance fit the descriptions above, you might not need or want rent to own... unless you desire the stability of home ownership now, while working to improve your credit, down-payment, etc. to qualify for mortgage. Maybe you have found the perfect home in a great school district for your kids. So long as the monthly payment is not a problem, rent to own may allow you to move into your long-term dream hom sooner than later.

You think home prices will increase soon

This is too speculative for most people, but if you have a good insight into real estate market, it might be a viable (and potentially profitable) reason to get in to rent to own. By locking in the future purchase price with rent to own, you are protected from possible rapid increase in home prices and not get "locked out" of the market. Of course, there is a possibility that the home prices may drop in the future. In that case, you probably won't exercise your option to purchase.

Next, see what impact your credit score has in your decision making.