Rent to Buy IdahoSince our market has shown signs of decline, which actually includes the nation as a whole, there have been an increase of people looking for rent to buy options.  The phrase has several variations which include lease option purchase and rent to own options. Banks tightening up their loan guidelines has also made this a good option.  I will explain what this option really means. 

A Rent to Buy option has 2 separate contracts, a rental contract and a purchase contract...both contracts should reference each other.  Typically the seller will ask for a deposit which can actually serve as Earnest Money when you begin the purchase process, this deposit is typically non-refundable and is higher than a typical rental deposit.  The reason for the non-refundable deposit is for the seller to ensure that Buyer is a serious buyer and not just a renter.  If you are the buyer and uncomfortable with putting down non-refundable deposit/earnest money you may want to just look into renting for a time period.  The rental period is pre-determined and there is a closing date that is referenced in the purchase contract.  During the rental period a portion of the rent can go towards the down payment, this will vary depending on the terms of your agreement. All of the terms are negotiable, both parties should seek the advise from a competent professional.

The Rent to Buy option can work great if you have relocated to an area and cannot qualify for a loan, the reasons could be because of a new job, or maybe you are still trying to sell your previous home.  The Rent to Buy option is a great way to lock in a price and find a home that will someday be yours.

A Rent to Buy option can be a great option but can also be complicated, it is a good idea to use a professional for setting up these types of contracts.  Sometimes it is also wise to include an attorney for these types of purchases.

Another option that is becoming more popular is having the Seller carry the contract (Owner Carry) on the property.  This topic will be discussed further in next weeks post.