Rental Rent : A Rent

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With home prices still at an attractive level, a way for buyers working to repair their credit is to leverage a “rent-to-own” agreement. A rent-to-own agreement is a contract that allows a potential home buyer to pay an agreed uponmonthly rental amount to live in a given house. But beyond simple home rental privileges, the agreement also appliesa predetermined amount of the rent toward a down payment to ultimately purchase the home at a later date, usually in around three years. So while a buyer recovering from a recent foreclosure may have blemished credit that prevents them from buying another home immediately through traditional means, renting toown allows that same home buyer to actively work their way toward home ownership right now. A rent-to-own agreement is not without its costs. The monthly rental amount will be slightly inflated, in order to set aside credits each month toward the buyer’s down payment. In addition, there is an option fee the buyer must pay to the seller, which is used toward the down payment if the buyer chooses to buy the home at the end of the rent-to-own agreement. If the buyer chooses to not purchase the home, the option fee is forfeited by the buyer. So with a $100,000 home, the monthly rent might normally be $500/month. With a rent-to-own agreement, $600/month might be charged for rent, with the additional $100/month going toward the buyer’s down payment credit. The option fee may be around $2,500, and is based on a percentage of the home’s
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