If you have not already seen the ads online and television telling you how easy it is to rent to own a home, they will begin soon. There’s no coincidence that these ads have not been running much of late. With lower interest rates and skyrocketing prices, what seller in their right mind would not want all the money at once?
However, as prices are going down and interest rates are now skyrocketing, the market has changed and that means everyone’s strategies need to as well.
Finding the Perfect Rent to Own Home
Firstly, we’d be remiss if we didn’t mention our own excellent program to help you find a rent to own home. If you’re looking for one of the absolute best ways to get into a rent to own home, try The Renter’s Best Friend Rent to Own program here.
For those who are learning about real estate for the first time, do not feel confused or wonder what you have missed. Even the most predictable markets have confused experts in the field. The key thing to understand is when you should sell, rent or buy. Now, the complication here is that you have to base this on your personal situation, your personal finances and also the current market.
For the last several years, home prices have been quickly climbing. Many property owners have chased out, not wanting to miss out on the opportunity that was available to them. However, as prices have climbed too high too fast, things need to be adjusted. The easiest way to do that is to raise interest rates. By doing that, you are making borrowers or buyers pay far more to borrow the money they need to purchase a house. If the loans become too expensive, people stop buying, which makes the market cool down.
Now, it doesn’t matter what your politics are or who you want to blame for this. The fact is that the economy is cyclical and while we are all impacted differently, these are the proven measures that must be taken in order to avoid major recessions. The reason for a higher interest in rent to own properties is because now is actually the ideal time to utilize the strategy for everyone including sellers, buyers and renters.
(Something that will also come up is your credit. We have excellent programs for that as well. Before going any further, if you know your credit could use a little TLC, click here to get started on improving your credit.)
Why Is Rent To Own The Best Option For Renters?
One of the biggest challenges renters are finding right now is affordability, which is why many of them decided to buy homes, even at inflated costs. However, what’s forgotten in that mix is the increased cost of paying for a home if interest rates are through the roof. So, if rates are too high to buy, what can you do except to pay more rent? The answer is actually simpler than you think. Consider rent to own properties for a moment.
Instead of getting a place that has a landlord, you are dealing with an owner. Instead of borrowing money, you are actually just paying what you owe, as you can pay it, with agreed upon deadlines. That means you still get a home, an actual house, but you are not paying interest on it. Why would there be any interest if you are not borrowing money?
That’s the key advantage renters have in looking for these types of deals. Yes, you will have to put a large downpayment down, just as you would on a purchase. However, being able to cover that cost allows you to now have ownership in a property that you will eventually be the owner of.
Why Is Renting To Own A Great Option For Homebuyers?
The same rules apply for people who want to buy but are stuck now looking at interest rates that are too high. Along with that, low credit scores or not having 20% to put down will make your monthly payments skyrocket. Without having 20% to put down, the lender will make you pay an additional monthly fee that could add up to thousands a year.
In fact, if you purchase a house at the wrong time, meaning when your credit score is low, you do not have enough to put down and interest rates are already high, the same $400,000 house and loan could cost you an additional $50,000 to $100,000 during the length of the mortgage.
Rent to own deals completely skip that process and allow you to focus on only making payments to the owner of the property until you have paid them in full. This is why these deals are ideal in situations like we are seeing now with higher rates.
Why Should Sellers Consider Rent To Own?
It’s great that buyers and renters can benefit from these opportunities. However, what benefit does the seller have if they want a large sum of money and to be done with the property? The fact is that these cases again come down to timing. Yes, as the seller you should want to get rid of the property immediately.
If you were to try that now though, you would have fewer buyers who are qualified and serious about buying because it would be too expensive for most people.
By putting your house in a rent to own situation, you still get an immediate large sum in the form of the downpayment. However, you also get the added benefit of maximizing the value of your home. This situation benefits the buyer greatly, especially in a financial sense. Therefore, if you wanted $450,000 for your house, the buyer will be more receptive to that price, for the property as it is, because they are saving big on interest for borrowing the money.
If you consider the advantages each person has in this puzzle, it’s easy to understand why this situation may be ideal, especially given the current market conditions. However, what’s important to note as well is that these agreements often lead to an easier closing process as both seller and buyer are less stressed and frustrated and are able to come to a more convenient agreement for both sides.
Many have turned these situations into opportunities where they take the money saved from taking out a loan and they invest it in the upgrades both needed and wanted for the property.
Your options begin with what you are currently dealing with and need to accomplish. Consider that there is no blog, online chat, forum or YouTube video that is going to tell you exactly what you need to do. You have to weigh your options and consult with the experts before making a decision. This ensures that you know all your options and the best way to move forward in the current market.
Are you ready to take your first step toward home ownership? If so, it’s time to use The Renter’s Best Friend program for 1st Time Home Buyers and start making your dreams of owning a home a reality.