For many people they will never make a larger financial commitment than they do when they buy their own home. Prior to agreeing to any contract that binds an individual, it is imperative that it be fully understood. In a situation where one party wishes to Rent To Own A Home Colorado, there are risks and benefits for both the buyer and the seller.
Pros and cons for the buyer:
* Time to build up sufficient money for a down payment or time to repair a poor credit score
* While renting, the buyer can walk away from the deal if something is wrong with the house. The buyer will lose his option money and rent premium but this may prove to be far less than the amount it will take to repair the deficiency
* The buyer must pay the option fee upfront. The option fee is a percentage of the agreed sales price and if the home is expensive, this can amount to thousands of dollars; this may be hard to come up with.
* If the rent is late by as little as a day, the rent credit for that month is usually voided
* If the seller does not pay the mortgage and falls into default, the house will be foreclosed, the buyer will have to move out and lose his money
* If, at the end of the period the buyer can still not raise the down payment or get a mortgage, he will lose the option money.
Pros and cons for the seller:
* In a market where home prices are falling, the seller can usually settle the sales price at a higher price at the beginning of the three year option period
* People who have taken the option as renters will take better care of the property than they might if they had no vested interest in the property
* If the renter does not exercise the option to buy, the owner keeps the option money and rent premium
* If another potential buyer wants to buy the house for a higher price, the owner cannot sell as he has a standing agreed upon price with the renter
* If the renter can’t make his payments, the owner may not be able to make his mortgage payment, fall into default and lose the house to the mortgage company.
As there are many pitfalls for both the buyer and the seller, an agreement to Rent To Own A Home Colorado should not be done without both parties consulting a lawyer.
If you are hoping to rent to own a home in Colorado the people to see are Professional Home Buyers. If financing is a problem or if your credit score is weak, you can get still get the home of dreams.
