Looking to buy a home and not being able to obtain a mortgage can make you feel as though becoming a homeowner is a hopeless effort. There is another way to obtain your dream of getting the home you have always wanted. You may be in the opposite situation if you have a home that you have not been able to sell. This situation has a solution as well. With a rent-to-own option, both buyers and sellers can benefit.
What Is Rent-To-Own?
A rent-to-own agreement lets you rent a home for up to three years, after which time you are then given the option to buy the home. The rent paid during the lease agreement period would cover your right to remain in the house, just like typical rental payments. However, you are able to make additional payments toward the agreed purchase price when you set up a rent-to-own agreement with the seller. These amounts would go against the purchase price. However, if you decide at the end of the rental period that you do not want to purchase the home, you cannot get that money back.
What Are The Tax Advantages For The Buyer?
As the renter, or buyer, you will not get the same tax advantages as the homeowner receives with a rent-to-own agreement. There would be no mortgage interest amounts to deduct, but you may be eligible for a renter’s tax deduction. Tax deductions for renters vary among states, so you would have to check with your state to see what the tax advantage would be. Federal-level tax advantages go to the owner of the property and are set up around mortgage interest and property taxes.
While there may not be a tax benefit for the buyer, this type of agreement is still a good deal. The leasing time set up with the rent-to-own agreement will give you time to come up with a down payment for the home. If you are not able to obtain a mortgage due to poor credit history, this time will also allow you to repair your credit.
How To Approach A Rent-To-Own Agreement
A rent-to-own agreement should be approached in the same manner as a mortgage. There should be a title search done to ensure there are no liens or claims on the property. You should also have a home inspection completed to make sure there are no hidden concerns with the home. Another important part of a rent-to-own agreement is to make it as detailed as possible and as thorough as a sales contract. The agreement should show detailed information about what will happen at the end of the lease period.
Payment Agreement For The Buyer
Properly structured payments on a rent-to-own agreement can provide advantages to the buyer. You can set up monthly payments that cover your rent through the agreement and put some of the rent towards the purchase price of the house. Rental payments can be determined by what the seller can accept, as well as what you can afford. Make sure your payments are never late, as some rent-to-own agreements forfeit all accrued lease payments if you miss even one payment.
Not Interested In A Rent-To-Own Home? There Is Another Option…
IPS Amarillo offers homes through a lease with purchase option. This type of lease is perfect for people that aren’t sure about buying a home, but also don’t like spending money on rent. If you choose to pay an option fee, it will reduce your monthly payment. If you don’t want to pay the option fee, you will get a monthly credit towards your home purchase. Learn more about our Lease Options today!
We have many Available Properties in Amarillo and the surrounding area. For more information about the homes we offer, give us a call at (806) 220-6816 or Contact Us via email. You can also visit us in person at 5701 Time Square Blvd. #340 in Amarillo, Texas.