Risks of Rent-to Own


Risks of Rent-to Own

If you are the renter, it’s a good idea to weigh the options of a rent-to-own contract versus renting a home and saving money for a down payment on your own. They usually are done when you love a house and want to buy, but don’t have all the necessary qualifications. You either don’t have enough of a down payment, or your negative credit history is preventing you. A rent-to-own contract could be a good idea in these types of situations.

Make sure you understand when the title is transferred to you and who’s responsible if anything happens to the property while you live in it. It’s a good idea to have a home inspection before you buy the property – even if you’ve been living there for a few years – so that you’re certain of its condition.

Consult a lender to discuss the details of any rent-to-own arrangement, because in some cases a lender will consider the rent credit a seller concession that cannot be included as part of the down payment.

Rising home prices are always a concern. If you want to lock in a home at today’s prices, a rent-to-own arrangement can work well. BUT, make sure the contract specifies what happens if home values rise or fall between the time the agreement is signed and you go to settlement. This is one time when the assistance of an attorney who represents your interests should be mandatory.



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