Are you on the hunt to buy a house in Florida? But can’t -pay in full, and don’t have enough credit score to qualify for the mortgage? If yes, then is no need to worry, I have been there too. And, after consulting dozens of realtors, and property consultants, I found a feasible solution in the form of ‘rent to own.’
And, the best part is, to qualify for the rent to own programs in Florida you won’t have to worry about being rejected for the mortgage because anyone can qualify, as long as they fulfill the basic terms.
The concept of ‘rent to own’ is similar to the rent, but there is a catch, rent is usually higher than the average market. Another reason for the increase is, the rent-credit. This is the sum that is credited to the lessee’s account as a down payment for the house. This means if you are paying a rent of $1500, a month. Then you’ll have 13,500 at your credit by the end of the three-year lease. Didn’t catch up? No worries, I’ll explain the process of rent-credit below.
Along with rent-credit, you will also find a brief introduction of what type of rent to own contracts you can avail of, including the tricky concepts. Lastly, few pointers on what you, as a first-time, rent to own home buyer need to vary in order to avoid any future complication.
Know The Contract You Sign
There are two types of lease contracts, lease to option and lease to purchase. From the name, you must think they are more or less similar, but in reality, they are not.
The significant difference between these two is the freedom to opt-out. Yes, in the lease to option, you do qualify to buy the house, but you are not obliged to do so. This means you can walk away from the house if you can’t find it the best fit for your lifestyle. It is similar to try it before you buy it. But, you’ll be paying, more than the average to stay in the house for three years. Plus, you have to fortify the rent credit if you opt to leave too.
On the other hand, the lease of purchase provides no such liberty. And, the lessee is obliged to buy the property after the agreed term. So, if you think you will save enough to buy the house by the end of the term then you can opt for this, otherwise, if you have any doughts then the lease to option is a good option.
In a nutshell, you need to give a thorough read to the contract that you are signing. If you can’t understand the jargon then consult an expert and ask him or her to explain the terms to you.
Things To Know Before Signing The Contract
In addition to the lease option, there are more things that you need to know, and knowing these things will determine what responsibilities each party in the contract is obliged to perform.
- Maintenance Responsibilities
First, you need to know and clarify who will be doing the maintenance. Sometimes the freeholder shoves the responsibilities on the lessee e.g. maintenance, property tax, and repairs too. Paying for such things, in addition to hefty rent can be nerve reckoning. So, if you want to avoid such complications, make sure you have a brief meeting with the freeholder and discuss the terms. Don’t forget to include the discussed terms in the contract, as it could help you in court.
Moreover, after the contract is drafted you can ask your attorney to explain the responsibility so that you can assure you are on the right track.
- What Contract You Are Getting Into
Like I said before, this includes the lease to option and lease to purchase contract. And, these things are usually mentioned in twisted terms, often average people find it hard to decipher.
- Purchase Pricing
The third thing on our list is the price. For this, you can either go for ‘lock-in,’ or wait for the lease to expire. In short, this is depended on the lessee. So, if you think the price of a property in a particular area is on the rise then deciding the price while drafting the contract is the right option. However, the price will be higher than the current market value. On the other hand, deciding the property price at the end lease offer advantages and disadvantage too. If the price falls then you might hit a fortune and vise versa.
- Rent Credit
Lastly, understand the rent-credit. This is the most important thing in the contract. Wondering why? Because it serves as the deposit. The process of calculating is rent credit is simple, you just have to multiple the agreed rent with 0.25. Again multiple it with the number of the month you have in a lease term. Yeah, it’s simple. Plus, there is multiple rent to own programs in Florida which you can opt for, and get the contract customized based on your needs.