Traditional methods of purchasing a home are becoming less common than decades past. The American Dream has changed a bit.
As banks become tighter with their loan approval process and Americans are still digging out of the recession (and possibly credit problems they may have fell into), many are turning to alternative means of purchasing a home.
Renting apartments and houses has increased dramatically in recent years… and renting-to-own a house (or Lease Option as many people call it) has become a popular way for families to buy a local Long Island house directly from a seller (after a rental period that usually lasts 12-24 months), without the stringent qualification process offered by banks.
There are many pros and cons of rent to own housing on Long Island, which we will outline in this article.
Remember to read each detail of any contract that you sign, and consult with a financial advisor or rent-to-own expert if you have any questions, or any part of the process is confusing to you.
Pros of Rent to Own Housing on Long Island- Why It Can Be Great
The largest hurdle to home ownership is usually qualifying for a loan for the house.
Lenders have become more and more stringent with income and asset requirements to approve a loan since the recession, and with the current state of the economy, many Americans just cannot meet these unrealistic expectations. In a rent-to-own situation, the seller can determine the guidelines of approving the contract, and is often much more reasonable than traditional banks.
And this means that usually there’s a much lower upfront payment to get into the house… and you don’t have to go through the rigors of a bank qualifying.
Time to Improve Your Credit
As you’re renting to own a home, you have an opportunity (usually 1-5 years) to rebuild your credit rating so you can get a home loan to buy that house at the end of the rent to own / lease option agreement.
While working on your credit, you’ll have the opportunity to live in your future home, and when the term has ended, you’ll have saved both a down payment and hopefully increased your credit rating to get a traditional mortgage from a bank.
Cons of Rent to Own Housing – Some Drawbacks
Rent Can be More Costly
In a rent-to-own situation, including here on Long Island and all around New York, the seller can charge more for monthly rental since it comes with the option to purchase the house. If a buyer is unable to purchase the home at the end of the term, they will have spent more to live in a home without the benefit of purchasing it.
So you need to be sure that you’re serious about potentially purchasing this house at the end of the rent to own agreement… otherwise you’d be better off just renting a house through the normal rental channels.
Buyers must beware the risks involved with lease cancellation, eviction, and other factors when considering a rent-to-own home. If a buyer is late on payments or breaks the lease in any way, the option to purchase the home may be lost, and they will have forfeited all fees and additional rent they’ve paid for the ability to purchase at the end of the term.
So same goes here as in the first drawback… if you’re wanting to rent to own the house… be serious about it and use this as an opportunity to improve your credit and earn your way into a great house you’d love to own.
For many Long Island residents who can’t get a traditional bank loan to buy a house… the Pros and Cons of Rent to Own Housing On Long Island are clear cut.
If you don’t have the credit or don’t have a huge down-payment… but want to experience the feeling of “ownership” while you work on purchasing that house… looking for great rent to own houses on Long Island is a great route.
If you’re not fully committed to improving your financial situation, your credit, etc… doing a rent to own may not be the right fit.
Rent to own is an attractive option for many Americans. By knowing what you’re getting into, you have a prime opportunity to buy your dream home without meeting the often unrealistic standards set by traditional mortgage lenders.
Have Questions On How Our Local Rent To Own Program Works?
If you have questions about the rent to own / lease option process works… we’re here for ya!
Just click the link below to see our available properties… or connect with us by calling us at (559) 546-1252 or through our contact page on this website.