- An advantage of a rent-to-own contract for the buyer is that she has additional time to save for a down payment. A buyer also gets additional time to clean up her credit history if she has negative marks due to collections or late payments.
- A rent-to-own home allows a buyer to try the area before he purchases a home. He gets a feel for the neighborhood, schools and overall environment, including crime rates. A buyer also does not have to wait weeks or months to move in while the inspection, appraisal and documents are gathered. He typically moves in as soon as he pays the upfront fee and lease payment.
- A rent-to-own option allows sellers to sell their homes quickly, especially in a market where homes remain on the market for extended lengths of time. She can offset mortgage costs, especially when a seller has already purchased a new home and needs to sell his old home to avoid paying two mortgages at once.
- Buyers lose their investment if they fall behind in payments. If a buyer pays $1,200 each month for a home, with $400 of the payment each month to go towards the down payment; they have accumulated $14,400 at the end of three years, as an example. If a buyer decides not to purchase the home, falls behind on payments or is evicted, he loses the investment.
- When a rent-to-own contract is drafted, the buyer locks in the home's purchase price. If the home value falls while the contract is active, buyers may pay more for the home than it is currently worth. A buyer and seller may be able to re-negotiate on a lower price, but if not, a buyer must decide if he wants to walk away from the investment or continue to go through with the purchase.
- A buyer loses out on their investment if he cannot secure financing at the end of the contract term. Unless he works something out with the seller or has a clause in the original agreement, he risks losing out on any fees or extra rent paid during the course of the contract.
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