Do you plan to buy a house? Read this
Do you plan to buy a house? If yes, you have to evaluate your financial options to know how to finance your project. Cash might be the best option because the total purchase fee will be less than buying a house through a mortgage or any other option. However, if you don't have enough savings, getting a mortgage might be another option if you have a good credit record. But, if that is not possible, a rent-to-own home might be your only alternative.
In this strategy, you will set a purchase price and rent the house with the option of completing the buying process after a few years. However, before you occupy the house, you have to sign a lease agreement and a purchase contract to prevent disagreements and legal issues in the future. Besides, you have to pay a certain amount of money to the property owner, which you might lose if you fail to purchase the house as indicated in your agreement. So, how do you get the best deal in this agreement? Read through to find out.
Please read The Contract Carefully to Ensure That It Has the Right Wording
The wording in your rent-to-own contract can work against you in the future. For example, when you want to apply for a mortgage, the lender will use the details in your contract to decide whether to give you the money you need. Therefore, before you sign the lease-purchase contract, ensure that every detail is clear and acceptable to the lender you approach in the future.
First, make sure that you and the seller indicate the upfront fee clearly in the contract. Then, keep all the records of your payments to enable your lender to know the down payment you have amassed from the time you rented the house. If there is a mix-up, your lender might not know how much your down payment was, which might make them decline your funding requests.
Therefore, before you put pen to paper, go through the contract several times to ensure that the payment you have made is indicated properly. Besides, it would help if you were sure that you would buy the house at the end of your contract. After all, if anything goes wrong, you will be the loser if you can't secure funding at the end of the agreement because the seller will keep all the money you have paid since you took up the house.
Lookout for Scams Before You Sign the Agreement
Some sellers are not genuine when drafting the lease-purchase agreements. They include controversial clauses that allow them to cancel the deal and keep all the money even when sellers make simple mistakes. Therefore, before you sign the rent-to-own agreement, make sure that every clause is understandable. If the agreement states that you will maintain the property during the rental period make sure you can keep that part of the deal to avoid legal action for breach of contract. Also, make sure you see the house's condition to find out the total maintenance costs needed to keep the house in top shape.
You also need to find out the actual owner of the house you want to rent. For example, the person negotiating the deal might be a con man who wants to steal your upfront fee. Therefore, before you start the negotiations, visit the relevant departments to check whether the person negotiating the deal is the property owner.
Work With a Professional Lawyer to Avoid Costly Mistakes
Buying a house through the rent with a purchase option poses many risks for first-time home buyers. One simple mistake can be very costly, and it might kill your dream of owning a home. Therefore, it is advisable to work with a professional real estate lawyer throughout the process to avoid costly mistakes.
Your lawyer will examine your agreement carefully to check whether any controversial clauses could work against you in the future. They will also conduct the relevant searches to determine whether there are legal issues that might affect the ownership of the house. Also, your attorney will help you get orders barring the property owner from transferring the property while under contract with you. The orders will also prevent the property owner from acquiring a mortgage against the property without informing you.
If you've decided to rent a house with a purchase option, use the tips above to ensure that you get the best deal out of the agreement. The tips will help you avoid costly mistakes before signing the rental agreement and throughout the rental period. That will ensure that you keep your part of the agreement, enabling you to purchase the home at the end of the agreement.
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