With so many homes and property in Windsor on the market today, many sellers and buyers are looking at a “rent to own” option as a win-win solution for both. What exactly is a rent to own? It can vary, but usually this process entails where a portion of your rental payment actually goes toward the purchase of the home. Agreements such as these are decided by both the buyer and seller. The reason? Often, it gives buyers more time to save for a down payment or to develop better credit scores. This also can help sellers who have someone taking over the mortgage payments and knowing the home will eventually be sold.
Who should consider this type of deal? For buyers who want to purchase property in Windsor and have good credit but need more time to generate more cash for a down payment, this could be something to consider. For sellers, if the potential buyer is a long tern tenant who has a proven tract record in making on time rental payments, and clearly wants to purchase the home, this could be a positive arrangement.
However, like all good ideas, there can be potential problems. Buyers can make the payments faithfully only to discover that the owner stopped paying the mortgage company during the lease term. On the other hand, owners can find out they have a tenet who can no longer make the payments thus leaving them at ground zero. Sellers can also discover that their buyer, who was working to repair their credit scores, has not been able to do so. Which begs the question: Why would you lease to someone today, when they could not qualify to buy your home?
Lease/Purchase agreements must be drafted correctly to protect both the buyer and the seller. It is essential to contact a good real estate lawyer to draft the proper forms. A solid contract can safe many a headache down the road when purchasing property in Windsor. One other factor to consider: avoid long-term leases. Much can happen to the real estate market and the price of the home can fluctuate.
Finally, both parties should do their homework:
1. Know your buyer. From credit scores to filling out a loan application, know your buyer’s financial history.
2. Home Inspection. For a potential buyer, this is very important. Go through a walk through with the owner and have an agreement should any repairs be necessary.
3. Set a Price. Determine the price up front and get it in writing.
4. Know precisely where the money is going each month. Buyers should confirm that payments are going to the mortgage company each month.