One of the first questions we get from potential tenant buyers of our local Chicago IL rent to own homes / lease option homes is “how do rent to own homes work in Chicago?”
With a flooded real estate market, especially since the bubble burst of the mid-2000’s, rent-to-own homes have become a popular option for people who are deciding whether to purchase or rent a home.
Renting to own offers advantages to both buyers and sellers.
For the seller, they have steady income to make steady mortgage payments, while the seller has a period, typically a year or two to organize his or her finances and secure financing to buy the house.
The Local Rent To Own House Process
Renting a home to own a house is a relatively straightforward process, though many people are confused.
A common misconception is that the renter can live in the home and pay rent over a period of 15, 20, or 30 years, then own the home. It’s slightly more complicated that that.
But 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.
• The renter will have the option to purchase the home at an agreed upon price at the expiration of the agreed upon time period.
By giving a potential buyer a year or two to get their 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 you own the house (because you may own it someday!) and having that sense of home ownership during the process.
How Does The Monthly Rent Work With A Chicago Rent To Own House?
Really it depends on the location of the house (there may be different laws that dictate what you can do in different states) and any new federal guidelines that may come out that may limit what the property owner of the rent to own house may do.
But 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 Chicago IL 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 (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 Chicago… the choice is fully yours.
So, for the question of “how do rent to own homes work in Chicago“… 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 do your research, talk with reputable and experienced companies like Chicago Home Buyers who can walk you through the local Chicago 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 Chicago IL, click the link below and fill out your basic info to get on our Chicago 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.
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