Rent to Own Approach still the Best Middle Ground
There is new fluctuation in the housing market. Sales are up, based on September reports, which many experts may see as a shift from a buyer’s market to a seller’s market. Any fluctuation, up or down, can be seen as short term by the naysayers, hence, there is still the argument that renting remains the only way to go, for some. Renting is a non-committal commitment. But what if, as most analysts say, this trend is here to stay, and the best news regarding home sales since the height of the bubble should be viewed as a lasting positive, rather than more fodder for housing market skeptics. The truth is, what has been the rule since the height of the bubble is still true: low prices make owning a home more affordable now than it has been in decades. It’s still very easy to find homes for sale at prices that are cheaper than renting.
Smart buyers who want to make more of a commitment than renting are deciding to put off the purchase by choosing that middle ground that lets them have their cake and eat it too. That’s what a rent to own approach achieves.
The rent to own approach, i.e., leasing with an option to buy, gives the homeowner-to-be a 12 – 24 month rental period to consider their choice, and locks in today’s low price until they’re ready to go to the lender, get a mortgage, and buy outright.
Why does rent to own still make sense with mortgage rates so low? It still can be a painful, and often futile process to qualify for the mortgage loan you want without at least a 20% down payment. Without that large down payment in hand, it is hard to get started – especially for folks whose credit score is below 700. Rent to own sideskirts this barrier. Make regular rent payments on time, in full, spend those 12 to 24 months saving for the down payment, and the experience of working with your bank to get a mortgage will be much easier to bear, and less costly, due to the lower interest rates one can qualify for with a sufficient amount down, and a good to excellent credit score.
There are a myriad of other reasons that rent to own is still very much in vogue and doesn’t show signs of letting up anytime soon. The low home prices mean relatively low lease payments for the lease period. Sellers are more willing to credit a portion of monthly payment towards the future the purchase price.
No matter the reports of fluctuation – good or bad -- sellers are still highly motivated. It’s still taking them months to find a traditional buyer.
Think of this rent to own middle ground as a path to home ownership that cuts right through a jungle of homebuying “what-ifs.”