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Rent-to-Own Home: Is it Worth the Try?

Rent-to-Own Home: Is it Worth the Try?

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Many people aren’t eligible for traditional home loans, especially if they have a poor credit rating. Thankfully, rent-to-own deals can solve this concern. This kind of housing arrangement allows renters to buy a house over time under an agreement.

How does a rent-to-own home work? Put simply, the seller of the property allows a buyer to rent the place with an option to buy the said property within the agreed lease or rental period. In the meantime the seller will receive payments, of which an equal portion is reduced from the final price of the house. 

There are other good reasons why you should opt for a rent-to-own housing agreement. Apart from getting a stronger financial position after a few years, we’ve curated and listed here the best advantages you can enjoy when opting for rent-to-own deals.

Having Bad Credit Scores? No Problem

Having a credit score lower than 500 is considered a bad credit rating, which makes a person ineligible for most home loans. Thankfully, aside from bad credit personal loans, rent-to-own housing arrangements allow you to buy a house with a poor credit rating.

While on a rent-to-own arrangement, you can rebuild your credit history and score over time, and eventually be qualified to get a loan when it’s finally the right moment to purchase the house.

Lock in Purchase Price

Locking in the price of a property means that the seller and the buyer have made an agreement (i.e., a standard lease agreement) to settle a purchase price. This can take place several years in the future but is often confined within a certain period.

This is called p=the purchase price, in which a negotiated purchase price will be fixed and final, as written in the contract. Again, when there’s a price appreciation, a seller cannot change the home price throughout the contract time frame.

Most rent-to-own programs lock in a purchase price. Considering the continuous increase of home prices in the market, a lock in a purchase price is advantageous. Chances are buyers can back out if the price of a property falls. This, however, depends on how much a buyer paid under their agreement with the seller and, especially, when the market reacts in the opposite way.

Everything is Negotiable

As mentioned, a rent-to-own transaction starts with a contract, which implies that everything is negotiable. All the terms indicated in the contract should fit the needs of both buyers and sellers.

Whether you’re the seller or buyer, it’s your right to request specific points or conditions, depending on what is important to you before affixing your signature on the contract. You want to make sure that the terms are not in favor but equal to both parties. Hence, be sure to read the agreement carefully before signing it.

Allows ‘Test Driving’

Test driving a house is another advantage of rent-to-own places. What does it mean? Gone are the days of traditional half-an-hour long home viewing. The thing nowadays is to let homebuyers try their future home out. Like test driving a car, potential buyers can stay in the property for a night or even a month before deciding to buy the house.

Inviting over their other immediate family members or close friends can be possible. In this way, buyers can avoid the pressure of deciding on the spot because they can ask for a second or third opinion from their loved ones. What’s even more crucial is that potential buyers can experience any potential house issues in advance, before it’s too late.

Builds Equity like a Real Homeowner

Truth be told. There’s no way you can build equity the same as how homeowners do, especially if you’re renting a property. Instead, it seems like you’re throwing money away.

More importantly, due to the agreement’s assumption of buying the house at a later time, the seller will often require a higher down payment and monthly payments. This can be hard for others, especially those who have bad credit scores. Buyers might opt for other financing alternatives, such as the need to get quick cash or apply for personal loans, to finance these up-front fees.

Having said that, the payments you do for rent-to-own housing arrangements can accumulate and come up with a considerable sum to put toward a property’s purchase. Doing so can rebuild and better their credit, which can make their profile more attractive to mortgage lenders in the future.

Also, buyers can avoid the drawbacks of rent-to-own programs and be able to buy any property by saving money in a savings account. It may take some time, but you’ll eventually build equity once you acquire the property.


Buyers of rent-to-home housing arrangements can save money by not moving out, as well. They might be unable to buy a certain property for now, but sooner or later, they can eventually acquire the place. Whether a rent-to-own home is worth the try or not depends on your current situation and personal plans. The great thing about this deal is that you’ll have enough time to save up money and to decide whether you’ll want the house long term or not.

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