Believe it or not, the term rent to own is becoming more and more mainstream in today’s real world.  It is becoming harder and harder for a big chunk of our population to qualify for their own mortgages even if they have already decided they want to own versus renting.  Why?  Simply put, sometimes bad things happen to good people and they find themselves in undesirable situations where their credit gets damaged or maybe they don’t quite have enough saved for a down payment.  In the past, the only option available to those that wanted to own but couldn’t was to rent.  Rent!  Yes, they had to spend their hard earned dollars on someone else’s property.  Well, gone are the days when people just had two choices; Rent or Own.   Although it is not a new concept, rent-to-own is certainly unknown to many.

So just how do you know if rent to own is a good option for you?

Although there is really no defined formula that makes one person more suited to rent-to-own than an other, here are five  key things that make one person a better fit for a rent-to-own program:

1. The Desire to Own Your Own Property

Have you had that “AHA” moment when you just come to the realization that there has to be more to life than renting?   Maybe you see the light and have started to understand that your money can start to work for you by building equity in your own home?  If so, this is big step in the right direction and one that will likely take you into the path of rent to own if you don’t already qualify for your own mortgage.

2. Determined to Create a Fresh Start for Yourself

Okay, so you have gone through some tough times in the past and you know that there has to be a silver lining out there somewhere with your name on it.  Determination and dedication are the best ingredients for turning a bad thing into a good thing.  As long as you don’t get caught up on the mistakes made in the past, and you are determined to make a fresh start for you or for your family, than you are in line to be considered for a rent to own program.  Make yourself a priority and focus on the goal of owning your own home and rent to own can work wonders for your family and your financial future.

3. Damaged Credit Anchoring You to the Bottom

Credit is very important in many facets of our lives today.  Right or wrong, it can single-handedly prevent us from obtaining many of the small pleasures in life such as home ownership.  But can you repair your credit on your own?  Do you know what to do?  Most of us will believe that we do but unfortunately will flounder over time and be in the same position or worse in the same time that you could have completed a rent to own program. Don’t let pride get in the way.  There are plenty of people in this world who know more than you do and with their help, you can achieve things you never thought possible.  Rent to own affords you the time and credit support to repair your credit while you live in the house you want to own.  Now imagine popping the bubbly in three years when you qualify for your own mortgage and reach your goal.  As quickly as “credit” can bruise the spirit, there is nothing more uplifting than beating “credit” and getting yourself back on track.

4. Need for Speed – Building up Your Down Payment

So far you know you want to own a house, you have the determination to follow through and understand that your credit needs a boost.  So what about your down payment?  Do you have some money you can put down on a property to show that you are serious and want to complete what you start in the program?  Most rent to own programs will require a minimum down payment of anywhere between 2-5%.  This money is directly applied to your down payment when you purchase the house.  Great you say, but what about building up a bigger down payment?  Good thought.  Understanding that a bigger down payment can only benefit in the future when you want to qualify for your own mortgage is a key step in recognizing that rent-to-own could be a good fit for you.  Although your monthly payments will be a little higher in a rent-to-own program over renting, what you need to  understand is that a portion of that monthly payment is going towards your down payment – consider it forced savings.  Each month you are paying down your down payment so that at the end of the program you have already contributed between 8.5-10%.  Not only does this provide a buffer for you if the mortgage laws change again, it should also help you secure a better mortgage rate as you will be seen as less of a risk because of the larger down payment.  Doesn’t that make perfect “dollars” and sense?

5. Desire to Build Equity for Yourself, Not Your Landlord

Have you been renting for a long period of time?  You know, investing your hard-earned money into someone else’s house.  A house that the landlord probably does very little in the way of repairing or maintaining?  As an example, if you have been renting for $1800 a month for the last three years, you would have invested $64,800 and built up some nice equity…..for your landlord (not including any money you have spent on those needed repairs you couldn’t get a return phone call for from the landlord).  As you sit and ponder how much of that money you will see again in the future (think zero), you would have invested that into a rent to own and been building equity on a yearly basis.  Our program for example locks in the numbers including future buy price up front and at a reasonable rate (far less than the rate of growth the market is seeing today – i.e.: $300,000 house in our program would increase on a yearly basis at 4% or $12,000 dollars – compare this to the conservative market increase of 8% and you would be earning 4% in the first year (or $12,000 on your investment in the rent to own).  On top of that, any repairs or upgrades you make to the property could force the value even higher which would put more money back in your pocket when you decide to sell (after the rent to own program has ended).