Financial Benefits Of A Real Estate Market

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A victim of foreclosure has to think creatively in order to find ways to take advantage of a good real estate market. In doing so, these buyers may discover that the “rent-to-own” option provides many advantages with only limitedfinancial risks making it a valid alternative worth serious consideration. “Rent-to-own” options, vary state to state, but are legally binding contracts that typically involve a renter leasing a home for a set amount of time with the option to purchase it at a future date for a predetermined sales price. While the benefits of the “rent-to-own” option for victims of foreclosure are interwoven, the renter’s finances, material interests and reputation are all protected. The financial benefits lie in a contract that…show more content…
The renter has the option to purchase the home at the predetermined price on that date regardless of the home’s actual value at the time. This option benefits the renter if the housing market values increase. For example, if the market proves to be fast-growing, the renter has secured a purchase price that will mostly likely be lower than the market value at the time of sale. Conversely, the renter has the freedom to walk away if the predetermined sales price is higher than the market at the end of the lease term.During the lease period, the renter pays the owner rental payments whichare typically higher than the market rent and this portion the owner credits toward the purchase price of the home. These accumulated credits are forfeited if the renter decides not to purchase the home which is a minimal financial risk for the renter. The renter’s material interests are protected in numerous ways through the “rent-to-own” option which makes it quite appealing for those who have previously lost a home to foreclosure. This option provides an immediate avenue to begin investing in a home rather than waiting the typical three to seven years lapse time that most mortgage lenders require between foreclosure and approval for a new mortgage. The “rent-to-own” renter can build equity in the home through the premium option and the accumulated credit from each
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