Typical RTO agreements involve standard rent payments with an extra amount paid monthly (called a rent credit) that is saved in a separate escrow account to be used towards the down payment for the purchase of the home at the end of the lease. Check out the infographic below for a more detailed illustration of the Rent-To-Own process. // When arranged properly, this relationship greatly benefits both the buyer and seller. Buyers, often considering Rent-To-Own because of a dinged credit history or limited savings for down payment, get to develop equity in their home and do the work needed to secure a mortgage loan. Sellers with property they are having difficulty finding buyers or tenants for have stable tenant occupation to cover mortgage payments through the term, plus a small profit and expanding equity in the property before it sells.
As illustrated from the infographic below, at the end of the lease term, the renter/buyer has the option to secure a home loan and purchase the house. In most arrangements, money saved from rent payments during the course of the term goes into the purchase at the time of the sale (serving as a down payment, or a large portion of it, depending on the lease agreement.) The buyer also has the option to walk away from the property at the end of the lease term, though that most often involves walking away from the down payment investment made throughout the duration of their stay. For people interested in Rent-To-Own options, we offer expert Rent-To-Own specialists who can answer any questions you may have about credit, the process and more. Just like owning a home, renting-to-own is a process that requires considerable care, effort, and reward.