Rent to own a house is also called lease to own a house (or a whole slew of other phrases… like lease option, lease purchase etc.).
So how do rent to own homes work in Charlotte and other parts of NC?
How Do Rent To Own Homes Work?: The Agreement
It is kind of similar to a car lease.
In this kind of arrangement, the renter rents a house from the owner of the house and pays monthly rental fees for living in the house. Within given period of time, usually one to three years or so, the renter can decide to purchase the house at a price that the renter and owner of the house agreed upon at the start of the rent to own agreement.
Of the monthly rent paid to the owner, a fraction can sometimes go towards down payment of the house depending on the local laws and guidelines. Sometimes applying part of the monthly rent to the purchase price is now against the law because of a law passed by Congress called the Dodd Frank Law.
The Rent To Own Contract Agreement – How It Works Here In Charlotte
The contract the buyer and seller draw up should be very clear. You should understand the nature and terms of the contract properly before signing it. Make sure you ask the seller lots of questions if you’re not clear about anything at all.
This arrangement has got advantages for both sellers and buyers alike… but also some huge benefits. So understand both the pros and cons so you can make the right decision for you and your family.
The Financial Parts Of The Rent To Own Agreement
First, the seller has to set the purchase price and monthly rent for the house.
The Monthly Rent
The purchase price is usually retail value for the house in today’s market. The monthly rent is usually a bit higher with a rent to own/lease purchase agreement than if you were to just rent a house normally.
Why?
Because you’re paying for the ability to purchase that house at the end of the agreement and you’re locking that house down so others can’t purchase or rent it during the entire term of the agreement.
The Purchase Price
The agreed price and monthly rent is settled and locked in for the entire rental period of time, which is usually between one and three years.
The agreed price doesn’t change the agreement based on market prices in Charlotte, whether they rise or fall. That’s one of the big benefits of buying a house here in Charlotte with a rent to own / Lease purchase agreement… that you can lock in to buy a house at a price today… and not have to buy the house for 1 – 3 years… and that purchase price won’t go up over those years.
Upfront Payment
There is an upfront payment called option fee or down payment depending on how the paperwork is created. It is a set amount of money payable to the seller by the buyer before you move into the house. This amount can really vary based on who you’re working with and the house price… but a rule of thumb is usually 5-15% of the total house purchase price is what you can expect to pay upfront to enter the agreement… and this payment is usually applied to the price of the house when you buy and is non-refundable if you decide to NOT buy the house at the end of the agreement. So make sure you can purchase the property before the contract expires so that you do not loose this money. That means having cash available or being mortgage ready.
This method of buying a house in Charlotte with a rent to own agreement is very good for buyers who would otherwise be unable to purchase a house or whose credit score or other circumstances wouldn’t meet the required threshold for a mortgage at the time of the move in. Rent to own gives the buyer time to fix whatever issues are preventing them from buying the traditional manner and go ahead and move into the house before they buy it.
For sellers like us, the rent to own opens up the potential “buyers pool” so we can help more people get into great homes.
For buyers, it lets you work toward home ownership and have that sense of pride you feel when you own a home, because you are already living in the home you are in the process of buying.
The End Of The Rent To Own Agreement… What Happens?
Of course, the idea of getting into a rent to own home in Charlotte North Carolina is that during the rental term… you improve your credit and financial stability so you can get a normal home loan at a bank.
So during that whole period… you should be really working to improve your credit… save up money… and work with a local Charlotte mortgage broker or bank to get pre-qualified BEFORE the rent to own agreement expires.
At the end of the rental period, you as the tenant/buyer have the choice to either buy the house at the price in the agreement… or you can walk away and not buy the house just like a normal rental house.
If you choose not to buy the house, no biggie at all. You can move out of the house and onto another house… or under special circumstances, you may be able to update the rent to own agreement to give you a bit more time to get qualified for a bank loan to buy the house.
With our local Charlotte Rent To Own Program, our ultimate objective is to help you reach your goal of home ownership. So we can be flexible often times if you need an extra few months to get things lined up financially and work with the bank to close on the house.
Just like in any other way of buying a house in Charlotte, there are mutual pros and cons for both the buyer and seller.
So just do your research… keep browsing this website and check out our Frequently Asked Questions page… or give us a call anytime at (980) 553-1804 or shoot us an email on our Contact page to chat with us and our local rent to own program.
Last… have you found the Charlotte rent to own house that’s perfect for you yet? If not, join our Early Property Alert List below to get email alerts quickly when we have new rent to own houses in the Charlotte, [maket_state] area available.