Typically, you, the buyer, will put down an option consideration, like a deposit for a rental, to secure your place as the future owner of the home. Then you’ll make monthly payments, and at any time during the option period, you are authorized to complete the transaction of the home. The process of “How it Works” is very simple.
But, let’s take a look at the advantages for you as the buyer.
In a rent to own agreement, you, as the buyer, freeze the price on the home for a year or two in advance of when you’ve agreed to close on the purchase. Since most markets appreciate, you’re locking in a good deal.
The extended closing date allows you the time to clear up any credit issues, and get pre-qualified for a loan. When you meet with a mortgage broker you’ll understand the amount of debt you can shoulder each month and still be approved for a loan. You’ll also discuss loan types, making you a well informed future borrower.
Essentially, renting to own gives you the time to get your finances and credit issues in order while you’re living in your dream home.