When it comes to buying a home most people want to get into a home that they will love. Buying a home is quite a complicated process that involves many parts. At the center of it all is the mortgage. You must have a good credit score to qualify for a mortgage, you need to have a down payment, it must be the right type of mortgage for your situation, and many other things.
But, do you know that there is another option?
Rent to own
You rent a home for a certain amount of time, with the option to buy it before the lease expires. Rent-to-own agreements consist of two parts: a standard lease agreement and an option to buy.
How Rent-to-Own Homes in Ohio Work
A rent-to-own home is also called a lease-to-own home. This occurs when a potential buyer agrees to rent the home for a period of time before buying it from the homeowner. This is a great option for those who may not have enough money to buy the home upfront but can still make monthly payments. This is also a great option for those who have bad or no credit but still want to own a home. This also makes the purchase more affordable to the buyer, while the homeowner is able to bring in a little rental income along the way.
For example, if a home would normally sell for $360,000 then a renter might pay $2,000 per month in rent over five years (60 months). If $1,000 of that goes towards paying for the home, then the renter would have paid $60,000 over five years. This brings the purchase price down to $300,000.
It’s up to the homeowner to decide what percentage of the rental income goes toward the purchase of the house. During this five-year period, the buyer will also have time to build up their credit scores and can potentially secure a mortgage because they require less money from the bank.
Rent-to-Own Home Maintenance
It is also worth noting that during this period the owner of the property will still have the responsibilities associated with making sure the house is safe and livable, this means things like maintenance will be done by the landlord.
Is Ohio a Good Market for Rent-to-Own Homes?
In a seller’s market, fewer people are likely to list their properties as rent-to-own. This is because they can get competitive offers on their houses immediately and don’t have to manage the properties as landlords. Some sellers are worried about a potential housing bubble bursting in the future, so they want to sell immediately.
However, in a buyer’s market, when supply is high and demand is low, a homeowner might be more willing to accept renters if it means they will buy the house in a few years. The seller will be able to make some rental income and won’t have to worry about listing the property after the designated period.
Learn about the Ohio real estate market to understand who is buying and who is selling right now. These trends will determine home availability.