Rent to Own Houses: the Proving Ground for New Homeowners
Rent to Own Houses: the Proving Ground for New Homeowners
The news regarding homeownership isn't exactly comforting these days. Foreclosures are up and home values are down, way down. Fortunately, there is a way for you to test out whether homeownership is right for you: rent to own houses.
Under a rent to own agreement, you agree to rent out a house as if you were renting an apartment. You'll sign a lease, usually for one year. At the end of the lease, you can either renew your lease, leave the property, or make an offer to buy the house. Along the way, your landlord will withhold an agreed-upon portion of your rent check to use as a down payment should you decide to buy the home.
Rent to own houses look more attractive today thanks to the problems of the residential real estate market. Buying a house in today's economic climate is a risky proposition; no one is sure yet if housing prices have reached their bottom or if they still have a long way to fall. No one wants to buy a house worth $250,000 today only to find out that it's worth $200,000 six months from now.
Unemployment Uncertainty
Then there's the uncertainty in the labor market. The national unemployment rate has shown little indication that it will fall below the 9.5-percent mark any time soon. This has made potential homebuyers justifiably nervous. It's understandable that you might not want to take on the commitment of a monthly mortgage loan payment when you're not sure if you'll still have your steady job next week, next month, or next year. Those thousand-dollar-plus payments aren't easy to make when you're out of work.
The nation's high unemployment rate is one of the biggest factors in its equally high foreclosure rate. RealtyTrac, a foreclosure-information Web site, reported that 2.8 million properties in the United States received foreclosure filings in 2009, an all-time record.
Home Affordable Modification Program
These very bleak reasons are why the federal government created its Home Affordable Modification Program. Under this program, mortgage lenders and banks receive financial incentives to lower the monthly mortgage payments of homeowners struggling to pay their home loans. The government designed the program to stem the tide of foreclosures. Unfortunately, it hasn't worked; the government's goal was to help 3 to 4 million homeowners avoid losing their homes. The program, though, hasn't come even close to this figure.
You don't want to become a future housing-foreclosure statistic. Yet, you do want the benefits of a home, including elbow room, privacy, and your own outdoor space. Thanks to rent to own houses, you can get this.
Rent to Own a Trial Run
Consider signing a rent to own agreement as a trial run for homeownership. When you work out such an arrangement, you learn what it takes and how much it can cost to keep up a home. But you also retain the flexibility of renting. If you discover that you don't like living in a home, you can simply walk away from your lease when renewal time rolls around.
Be careful, though, when selecting a rent to own home. You'll be staying at this location, more than likely, for at least a year. You want to make sure that the rent to own houses that you consider have the amenities that you want: You might need one located near a good public school or within walking distance of local parks. You might want a huge backyard, or maybe you want a smaller yard that's easier to maintain. You might need at least three bathrooms depending on the size of your family.
When you're shopping for rent to own houses, it pays to be choosy. You're deciding whether the life of a homeowner is right for you. You need all the information you can get.
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