When most financially-savvy people hear the word “rent,” they immediately think of money being thrown away. For instance, when you rent an apartment, you’re simply handing money over to a leasing office or landlord without investing in anything you own.
However, with rent-to-own homes, the rental agreement is actually a worthwhile investment in your future. They can be a wonderful way to buff up your finances, get your hands on some valuable real estate, and put money towards your future dream home. Not sure how? Keep reading.
Rent-to-Own Homes Can Build Credit and Encourage Financial Know-How
If you’re ready to buy a house but your finances aren’t in order, you probably won’t be able to afford a down payment or qualify for a loan from the bank. By signing a rent-to-own agreement, you’ll commit to monthly payments for a house, which will slowly build up your credit score and make you eligible for a mortgage. Therefore, while renting, you’re actually building a credit history that will make life easier in years to come.
Plus, as you sign the rental agreement and learn how much your home will eventually cost, you’ll become better at managing your money and understanding real estate value. This knowledge might not be an investment in your wallet, but it’s certainly an investment in your financial skills.
They Allow You to Put Your Name on Up-and-Coming Pieces of Real Estate
Rent-to-own homes are excellent options for people who know where they want to live but can’t afford to buy a house there quite yet. If you know of a popular area in your city that’s increasing in value, it might be a smart idea to sign a rental agreement there with an intention to eventually own the house. This will lock in the home’s value at an affordable price, so when others are paying double in years to come, you’ll be able to buy the house for its original market value.
Your Monthly Rent Payment Goes Towards Your House Purchase
With most rent-to-own agreements, a part of each of your monthly payments becomes a credit towards eventually purchasing your home. Therefore, you’re technically not just renting a home; you’re working towards owning it. After two years of renting, you could have thousands of dollars in home credit that can be applied towards a down payment or the other costs that come with owning a home. Talk about an investment in your future.