Should you Buy a Rent to Buy Home

Rent-to-buy is a method of buying a house where you agree to have a lease over several years and then you have the choice to buy at the end of the lease. It usually lasts about 2 to 5 years and involves the buyer paying a monthly rent. This amount is linked to the value of the home, but usually is more than the going rate. There are many reasons that one might choose such a deal, and various advantages and disadvantages to it. According to Forbes, this is a strategy that should only be used if you are seriously planning on purchasing the house. Consider all the pros and cons when deciding whether to do this.
Pros
A rent-to-buy agreement allows you to not buy the home if you do not want it at the end. When you buy a house, it can be very difficult to sell it, especially in a market that is up and down. If something comes up and you are not able to buy the house, it is easy to just not do so when you have a rent-to-buy agreement. Someone who knows that they may have to move may want this flexibility.
The option to walk away will be especially important if the value of the property goes down a great deal. The person will not have a home that they spent a lot of money on that is now worth far less. This could save them from getting into a situation in which they owe far more in their mortgage than their house is worth.
This might be a good situation for people who do not have a great credit history. They will get equity in the home and give time for their credit history to get better.
Cons
If you decide not to buy at the end, then the money that you have paid, which would’ve gone towards the price of the house, will now be gone just like ordinary rent. You will not get any of that back. In addition, you are typically paying a higher amount in the first place and it will also be for nothing if you do not buy. If the home value goes down a lot over the time span, then you will also have paid more than you should have.
If your rent is late, then there is a good chance that it will not be included in the value towards the sale. Many contracts will disqualify these late payments, and someone who cannot pay timely may end up losing a lot of money.
Sometimes there are clauses that let the seller get rid of the arrangement, which can take away the value that the buyer has accrued. The seller may look for loopholes if the value of the home improves.
There are both pros and cons to a rent-to-buy agreement. It is very important to find a quality broker, as well as a real estate lawyer, who can make sure that you are getting a fair deal.