Rent to Own Basics

In a typical rent-to-own situation, the owner agrees to allow the tenant to move into their property and pay rent on it each month. The difference between this agreement and a regular rental is that part of the money paid toward the monthly rent goes toward an eventual down payment on the house. This means that rather than simply paying rent with no end goal in sight, tenants are working towards actual ownership of the property they're living in.

At some point during the agreement period, both parties will negotiate pricing for the sale of the home so that when it's time for tenants to take full ownership, they know exactly how much money needs to be paid in order to do so. It's important for tenants who enter into these agreements to understand that even though their payments are going towards something more tangible than just a roof over their head—they still don't actually own anything until all payments have been made and all paperwork has been signed.


Tips and Tricks

One thing many people overlook when entering into rent-to-own situations is credit repair and saving. Before signing any paperwork or agreeing to any terms, make sure your credit score is as high as possible so that your loan application will get approved quickly once it comes time for you to purchase the home outright. Additionally, try setting aside extra money each month if you can so that you can pay more than just your required minimum payment; this will help ensure that you hit your ownership goal sooner rather than later!