Buying a house or apartment can be very expensive, depending on the state or city. When it comes to the United States, there are many areas with high prizes where most people could get funds only by getting a mortgage or a loan. However, you will need an excellent credit rating for such a big loan, which can be complicated. In that matter, renting to own has become a very popular solution.
With this option, you can rent an apartment with a long-term contract, and have a chance to buy it before the end of the contract. When we look at the current trends, the prices in most states are rising, and various factors are influencing that, such as inflation, higher popularity of the certain city, the current situation on the real estate market, and more. When it comes to a rent-to-own option, there are two parts of this contract, standard leasing and the ability to buy the property after some time.
Some states have a huge gap between renting and buying prices, such as Colorado, where we can notice a huge rise in popularity of this option. If you are interested in this type of contract in Colorado, visit renttoownreviews.com/colorado. Moreover, we are going to introduce you to some of the main features of it and the reasons why it is more affordable in this state.
1. You Don’t Need High Credit Rating
One of the main reasons why people are interested in this option so much is because banks don’t require a high rating like with mortgage or funding. Unfortunately, many people are not able to get any other option. In that matter, you can sign this model. Also, you will get enough time to improve your rating score, and there is a great chance to get the ability for a loan before the end of the contract, which will provide you with funds to buy it in the end.
2. You Can Avoid Mistakes
Buying a house is not a simple process since there are so many factors that could affect its real value. As we all know, sellers might try to make it appear in much better condition. Still, if you buy it before inspecting each corner, installations, isolation, roof, and other elements, it might lead to additional expenses. On the other side, renting with an option to but at some moment can be a much better solution since you can rent it for a long time, and each maintenance and repair is the owner’s responsibility.
Therefore, you can be sure what you are buying in the end. An even better possibility is to set a price in advance, which is perfect considering the current trends where prices are increasing. In that matter, you can sign a contract for three years, and starting price will remain the same if you decide to buy it by the end of the lease. You can even earn a lot of money in case that prices go up during that time.
3. Big Price Gap
The issue with prices in Colorado is that in most cases, it can be much cheaper to rent an apartment than getting a loan to buy one. The main reason is that there are many new real estates’ made during the last decade, which lead to a huge increase in prices of property, while the rent hasn’t changed so much. When we look the statistics, the renting prices went up by around 10% in last few years, while values of property have risen by over 25%. According to some predictions and analyses, this trend will most likely continue, which is another reason why renting to own is a much better option.
4. You Can Start Paying in Advance
For an even better contract, you can set an agreement where you can create protection for yourself. For example, you can provide the owner with less than 5% of the total worth of the property when you sign the terms. There are benefits for sellers from this option since they are secured with the money, and they are aware that the people who are renting will work on finding the funds before the lease ends. With a high competition on the market today, where finding a good home can be complicated, this is an excellent option to secure the ownership in advance.
Are There Any Downsides?
While there are many advantages, you have to be aware of potential downsides. First of all, you should know that in case that you don’t buy a house by the end of the lease, you will lose all of the money that you have spent in previous years. Also, if you were planning to improve your credit rating in the time between, this process can be quite complicated in some situations. Also, there are some security issues related to the owner’s actions. For instance, if the current owner has some financial issues, or faces bankruptcy, financial institutions could easily take this property.
There are some potential problems for owners as well, like the fact that they can never be sure that the current client will buy the house in the end. However, they are secured with the rent. Moreover, they could lose a lot of money if the values start rising, and they accepted to sign an agreement with a determined price at the end.
The best way to be sure which option can be the best choice is to consider your current financial situation, values of property in a certain area, predictions, and more. Also, you have to sure that you will be able to get a loan by the end of the lease. If you don’t manage to improve your ratings, you will waste a lot of money. Rent-to-own can be much more expensive than standard rent. Therefore, always ask some financial expert for advice to be sure which option can be the best solution according to your work position, wage, rating, and more.