Are you thinking about buying a house in Chicago? If so, a rent to own agreement can be a great way to do it! Learn more about what to expect so you can understand the process before you buy rent to own property! And if you have any questions, we are always here to help!
Buying a house via a rent to own agreement can be a wonderful way to buy a house in Chicago. The process benefits both buyers and sellers who are serious about a sale. People selling their homes this way will be able to reach a whole new audience when selling this way, helping them to sell faster and for their asking price.
Those who choose to buy via rent to own will be able to become a homeowner even if they currently lack the credit or the down payment needed for a traditional home loan. While every agreement is structured differently, buying and selling in this manner can be very beneficial to both buyers and sellers. Keep reading to learn more about what you can expect before you buy rent to own in Chicago.
Things To Know Before You Buy Rent To Own in Chicago
There are different types of agreements that can be used. Lease-option and lease-purchase are two of them. Lease-option gives the buyer the option to buy after the agreement, whereas lease-purchase ensures they will. Knowing which type of agreement to use and how to set it up is critical when buying a house via rent to own in Chicago. At Chicago Home Buyers, we will make sure you are using the right agreement and that the terms make sense for all parties involved. We are happy to explain the different kinds of contracts, answering any questions you have before you buy rent to own in Chicago.
The Down Payment
Typically, when you buy a home via a rent to own agreement, you will need to pay the homeowner a down payment. While this doesn’t need to be 20% as with a conventional loan, it doesn’t need to be enough to ensure you are serious about following through with the home purchase. Depending on your agreement, this down payment may not be refundable. You can however structure it so that a portion of this payment goes toward your down payment with the bank when the time is right. Remember, the terms of the agreement can be negotiated so that both the buyer and seller can come out ahead.
Your Monthly Payments
In many cases, the monthly payments are slightly more than what you could expect to be paying each month in traditional rent. This is to help provide security while making it worth it for the homeowner. In some cases, a portion of the higher monthly payments can be put toward the buyers down payment to the bank when a traditional loan is taken out. Remember, all terms of the agreement can be negotiated before you sign. You don’t want to find yourself with monthly payments that are so high you can’t save up or that you risk not being able to make the payment one month and risk forfeiting your down payment and the ability to buy the home.
Maintenance, Repairs, and Responsibilities
Your rent to own agreement should be very clear about who is responsible for what. What if the water heater breaks a week after the contract is signed? Or what happens if the house suddenly becomes infested with termites? All of these details need to be ironed out ahead of time. You don’t want a discrepancy to come between you and the seller, causing you to miss out on buying the home you really love. Nor do you want to find yourself making a ton of expensive repairs after you’ve signed your rent to own agreement.
Typically rent to own agreements are only drafted to last a year or two. The idea is that while you are putting down roots, you can also improve your credit, save for your down payment, and do all of the things you need to do to qualify for a traditional loan to buy the house outright from the owner. Rent to own agreements don’t last forever. They are put in place to help buyers prepare while offering tremendous benefits to property owners. Setting up a rent to own agreement with this sort of timeframe can set up all parties for success.
Buying a home via rent to own agreement can be extremely beneficial to both buyers and sellers. That said, it is important that the agreements are properly set up so there aren’t any disagreements or discrepancies in the future. Working with Chicago Home Buyers will help you find the right house and set up an agreement that works for all parties involved.