Seven years and eleven months.
That's how long it takes the average person to save up to buy a house and build their credit score.
That's a lot of time to wait to buy a house. But there's an alternative way to buy a home. Rent-to-own homes provide the ideal solution.
Keep reading to learn how these home purchases work and if this option is right for you.
Why People Turn to Rent-to-Own Homes
Owning a home is a common dream. A home gives you a place of stability and freedom. It offers a place to raise your family.
Unfortunately, buying a house typically requires getting a mortgage loan. To get a loan, a lender looks at your credit and asks for a down payment.
Developing an excellent credit score takes consistency, time, and hard work. Saving up enough for a down payment also requires these things.
Lenders may not be willing to give you a loan if you don't meet their criteria for these things. As a result, you can't buy a house in the traditional manner.
This is one of the top reasons people turn to rent-to-own homes. A home seller might run a rental background check when selling you a home this way. But they'll likely be more lenient with the criteria.
How It Works
Every contract is different, but most rent-to-own homes offer similar terms. The process begins by finding a seller with a home you'd like to own. Next, you create an agreement for the deal.
The agreement outlines the terms. Here are some things it might contain:
- Rent amount you must pay each month
- House price
- Down payment amount needed
- Percentage of rent payments applied to equity
- Length of the agreement
You pay rent each month for the home. The owner applies part of it to the equity. At any time, you can get a loan to buy the house.
During the time you live there, the amount of equity you pay reduces the house price.
This process gives you a pathway to home ownership. It gives you time to work on your credit to meet a lender's loan criteria. You can check with a property management firm to find rent-to-own homes if you're interested.
Benefits of Renting to Own
If you don't meet a lender's loan criteria, buying a rent-to-own home provides a way to home ownership. You'll be investing in a home before you actually own it and will be free to use the house as you wish.
Owning a home this way gives you a way to build home equity before the house is in your name. The bottom line is it allows you to buy a house now while building your credit while you live there.
Find Rent-to-Own Homes
Rent-to-own homes offer a way to buy a house faster if you don't have a large sum of money on hand. They're also ideal for people with low credit scores.
PMI Windy City provides property management services in the Chicagoland Area. We specialize in residential and commercial properties and can help you find rent-to-own homes.
Reach out to learn how we can help.