In an era of uncertainty in the real estate market, many Albertans are finding that rent-to-own homes provide them with both flexibility and the option of purchasing a home at the end of the term. By understanding how rent-to-own homes work, you can position yourself to take advantage of the many benefits of renting to own, and realize the homeowner’s dream, despite any credit blemishes.
Curious how the “rent to own a home” process really works? We provide a basic overview of the process for you in this article.
What Is The Rent To Own Process?
One of the first questions we get from potential tenant buyers of our local Edmonton Alberta rent to own homes / lease option homes is “how do rent to own homes work in Edmonton?”
Its been a difficult economy for many people in Alberta since oil prices peaked in 2014. And the recent health scare we are living through has certainly made homeownership more difficult for many. Some people have recovered economically, while some are still in the process of recovering.
One strategy that has become a popular and effective method for homeownership despite bruised credit, if done properly, is rent-to-own homes. Why is it popular for so many? Because renting to own offers advantages to both buyers and sellers.
For the seller, they have steady income to make steady mortgage payments, while the seller has a period, typically a year or two to organize his or her finances and secure financing to buy the house.
The Local Rent To Own House Process
Renting a home to own a house is a relatively straightforward process, though many people are confused.
A common misconception is that the renter can live in the home and pay rent over a period of 15, 20, or 25 years, then own the home. It’s slightly more complicated that that.
But here are the basic elements of a rent to own agreement.
- A plan will be created to improve the credit of the purchaser and ensure they have a sufficient down payment to qualify for a mortgage at the end of the agreement
- The renter will have the option to purchase the home at an agreed-upon price at the expiration of the agreed-upon time period.
- This contract will state the monthly rent, and a set period of time.
- The buyer and seller draw up an agreement, covering all terms of a rent-to-own agreement.
By giving a potential buyer a year or two to get their financial house in order, the seller can continue to make mortgage payments on the home, while living elsewhere. This is beneficial to the buyer, as if they’re sure that they can acquire financing, they can usually begin customizing the home to meet their needs and preferences… essentially treating it like you own the house (because you may own it someday!) and having that sense of home ownership during the process.
How Does The Monthly Rent Work With A Edmonton Rent To Own House?
Really it depends on the location of the house (there may be different laws that dictate what you can do in different states) and any new federal guidelines that may come out that may limit what the property owner of the rent to own house may do.
But the standard guidelines of a rent to own house are pretty simple.
- You agree on a rental rate and a future purchase price upon the end of the rental lease sometime in the future (usually 1-2 years).
- You first pay an upfront payment to move in and secure the contract and the terms with the option to buy. The “option fee” or “move in amount” may in some cases act as a percentage of the down payment on the home, should the renter decide to purchase at the end of the term. This may or may not be the case depending on when and where you’re reading the article (based on laws). Connect with us directly for the local Edmonton Alberta Rent to Own laws.
- You pay the monthly rent payment. This is no different from paying rent in any normal rental situation.
- At the end of the rent to own agreement (usually 1 – 3 years) you decide if you want to purchase the home for the price you agreed on initially in your rent to own agreement. If you want to buy the home, great! We can assist you in getting qualified for a conventional loan to buy the home. If you don’t want to buy the home, no biggie. You’re not required to buy the home at the end of a rent to own agreement in Edmonton… the choice is fully yours.
So, for the question of “how do rent to own homes work in Edmonton“… well that’s the basic process.
While there are lots of benefits of renting to own a home here locally… every housing option has pros and cons.
Just do your research, talk with reputable and experienced companies like Sunrise Home Buyers who can walk you through the local Edmonton rent to own house process… and make the smart financial decision for you and your family.
Many people choosing rent-to-own may have past credit problems, or may just be unsure if purchasing a home is right for them. If that’s you and you want to look into the rent to own process and even see the available rent to own / lease option houses here in Edmonton Alberta, click the link below and fill out your basic info to get on our Edmonton rent to own home list.
Is Rent To Own FOr You?
Does it seem like a rent-to-own home purchase just might be the right opportunity for you to purchase a home? This blog post was just a simple overview of how the rent-to-own process works. If you feel you would like to learn more and investigate this homeownership route further, why not reach out to us? It all starts with a conversation. We can help position you to take advantage of the many benefits of renting to own. Why wait to make your home ownership dream a reality. despite past credit problems.