Rent-to-Own Programs

With the rising costs of housing, looming student loans and stagnation of wages, the entry to home ownership has risen quite significantly. There are alternatives to the traditional way of purchasing a home that has given millennials, Gen Z and those facing financial constraints a way to finally get a deed of their own. 

Rent-to-own programs bridge the gap between renting and owning a home. Rent-to-own programs are also known as lease options or option contracts. 

These programs allow for a renter to move into a home, pay rent and build equity at the same time.  A portion of the rent is allotted to a down payment account to be used when the renter purchases the home. 

Another benefit is that the renter has time to work on their credit while they are in their dream home to achieve a better interest rate when the time comes for them to purchase the home in which they already reside. 

The renter can also lock in a purchase price, which can save the renter thousands in this ever-rising housing market. (Although if prices ever drop, the renter could over-pay for the house).  It is very important to have all the terms clearly listed in the contract to avoid any surprises.  

The down-side is that the renter cannot apply for the homestead exemption on property taxes, does not have the mortgage-interest deduction for income taxes, and missing a payment can void the rent-to-own contract and any equity is forfeited.   

A rent-to-own program is not for everyone, but it can lower the bar of entry to homeownership for a large majority of the home-buying population. There are pros and cons to any avenue of homeownership, so due diligence is important in making sure that this is the right option for you. 

Christine Fleury is a real estate closing attorney with Origin Title and Escrow, Inc. Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road. Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using this form.