When you’re in the position to move, you may be weighing several options for next home. Many people wonder about the difference between rent-to-own and lease-to-own agreements. There are many variables to consider along with several facts that support each choice.
A lease accompanied by an option that gives the tenant-buyer the right to buy is a lease-option. This option does not mean there is an obligation to buy, which translates to the tenant-buyer is able to walk away at the end of the lease terms.
A rent-to-own agreement starts as a tenancy. It will include the monthly rent amount and the length of the lease. The agreement also includes a lease-option that could allow the tenant to buy the property within an agreed upon time period at a specific price. Generally, the tenant pays the landlord a nonrefundable amount of money up front for the option to own. If they decide to make the purchase, the option money usually is part of the down payment.
For rent-to-own, your money is technically being put toward a portion of owning a home and not just being amortized to monthly rental payments. The home you’ll be living in will also be given a trial of whether it’s a suitable fit. And, at the end of the terms, you are able to walk away from purchasing if you desire.
By contrast, in a lease-option, the lease agreement contains a provision giving the renter the option to purchase the place at some point. Both typically require the renter/buyer to pay additional monthly rent premiums to “buy down” the price of the home in addition to paying an upfront sum.
Which agreement you decide on is entirely dependent on you needs. To make the situation more palatable, it’s recommended you contact a real estate agent to help guide you through these pressing matters. The Brown Group has reliable and knowledgeable agents to ensure your next housing solutions is met with clearly defined terms.