A common question, and concern, from people looking at renting to own a Colorado Springs house is “are you required to buy the house in a rent to own contract”
As an example, let’s say you found a great rent to home and agreed on an attractive rent to own agreement with the seller that looks like this
$5000 upfront non-refundable option fee
$1800 monthly rent payment
$200,000 purchase price option at the end of 24 months
Under this example, you would have the option to purchase the home for $200K within 24 months (frequently you can purchase before the agreement ends with no problem if you can get the financing)
SO, ARE YOU REQUIRED TO BUY THE HOUSE IN A RENT TO OWN HOME AGREEMENT?
If the 24 months comes to an end and you’re just not ready to purchase the home, but you still love it and want to live in it, just connect with the seller and see if they are willing to offer you an extension on your contract. If you have been a great tenant and show a genuine interest in buying the house, the seller will usually work with you (it’s in everyone’s best interest).
If the 24 months comes up and you’re not ready to buy and you also really don’t want to stay in the house…you can move out and not purchase the house. There is no obligation for you to do so. The only loss you will incur is the non-refundable option fee.
WHAT HAPAPENS TO THE MONEY YOU’VE PAID THE SELLER UP TO THIS POINT?
If you choose not to exercise your option to buy the house at the agreed upon price, the time you spent in the house is treated the same as a rental, as you have been paying rent monthly.
That’s the key distinction you need to understand clearly with rent-to-own programs…that there are TWO distinct parts to the agreement…
- A Rental Agreement. This first part is a normal rental agreement. You pay a monthly rent for a specified period of time.
- The Option to Purchase. This is a separate agreement that gives you the option to purchase the house for an agreed upon price at a future date. This will usually also require an “option fee” which is non-refundable. The Option to Purchase agreement assures you that you will be able to buy the home at the price agreed upon regardless of increases in the market value of the home.
If for whatever reason you decide not to buy the home, you’re just deciding not to exercise your option to do so. At that point, you give notice as you traditionally would and everyone walks away looking at that past time as simply a rental. Its way better than buying a home and deciding you don’t want it and having to foreclose or short sale it. Buy renting to own with ColoradoSpringsRenttoOwnHomes.com your credit will actually improve whether you buy the home or not because the automatic debits required are reported to the credit bureau.
As a tenant buyer, you have the flexibility and freedom to do what you feel is best for you. You can live in the house and decide you love it and the neighbors, and choose to purchase. Or if it turns out to be not what you wanted and you don’t want to buy it, fine. You can walk away. It ‘s that easy.