One of the very first questions we will get from potential tenant buyers of our local Texas rent to own homes or lease option homes is “how do rent to own homes work in Texas?” It is by far the most asked question.
With a flooded real estate market as we have in Texas, especially since the bubble burst of the mid-2000’s, rent-to-own homes have become one of the most popular option for people who are deciding whether to purchase or rent a home. It can be a hard choice.
Now renting to own offers advantages to both buyers and sellers.
For the seller, they have regular income to make steady monthly mortgage payments, while the seller has a time period, typically from a year to two, to organize his or her finances and secure financing through a lender to buy the house.
The Local Rent To Own House Process
Renting a home to one day own is a relatively straightforward process, though many people are confused with how it works.
A very common misconception is that the renter can live in the home and pay rent over a period of 15, 20, or 30 years, then they own the home. It’s slightly more complicated that that. So let me explain.
Here are the basic elements of a rent to own agreement.
• The buyer and seller draw up an agreement, covering all terms of a rent-to-own agreement.
• >This contract will state the monthly rent, and a set period of time they will be renting for.
• >The renter will have the option to purchase the home at an agreed upon price at or some times before the expiration of the agreed upon renting time period.
By giving a potential buyer a year or two to get their credit and 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 they own the house (because they may own it someday!) and having that great sense of home ownership pride during the process.
How Does The Monthly Rent Work With A Texas Rent To Own House?
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 Texas 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 or some times before (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 Texas… the choice is fully yours.
So, for the question of “how do rent to own homes work in Texas“… 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 like in life. You have to look at what is best for you.
Just do your research, talk with reputable and experienced companies like The Aida Group who can walk you through the local Texas 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 Texas, click the link below and fill out your basic info to get on our Texas rent to own home list.
In an era of uncertainty in the real estate market, many Americans 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 American dream, despite past credit problems.
Sign up below to see our latest Rent-to-own homes!