During the pandemic, many Denver renters contemplated ditching the rental lifestyle and putting down roots in a larger house in the suburbs. But that’s not the case for everyone. During this time, many renters were content with their space or location but wanted the security of owning their property. For people in this group, renting or leasing to own a house or condo could be an ideal way to break into homeownership. Let’s look at a few different scenarios.
The rent-to-own model involves a tenant who signs a rental agreement or lease that has an option to buy the house or condo later — generally within three years. The renter’s monthly payments will include rent payments and additional payments that will go towards a down payment for purchasing the home. The lease contract will state the tenant’s rental payment, how much of the rental payments accrue toward a down payment, and how much the purchase price of the home will be.
Lease-purchase vs. lease-option
These concepts may sound similar, but there’s one very big difference: one is a requirement, and the other is a choice. A lease-purchase legally binds you to purchasing the home once the lease is up, whereas a lease-option gives you the opportunity to buy the house before the lease is up.
What do you need to do to prepare?
Before you sign a rent-to-own lease from your landlord/seller, you should get pre-approved for a mortgage at the purchase price stated in the contract or lease to ensure you can afford the home.
Depending on your situation and long-term goals, renting to own may be a great choice for you. But there’s only one way to find out – get an experienced pro on your side who can help answer the questions you may have. Metrowest has several rent-to-own options and can help you start the process!