Rent To Own MN

How Does Rent To Own Homes Work in Blaine? – The Process

Rent to own a house is also called lease to own house (or a whole slew of other phrases… like “lease option”, etc.).

So how does rent to own homes work in Blaine and other parts os MN?

How Does A Rent To Own Home Agreement Work?

It is kind of similar to a car lease.

In this kind of arrangement, the renter rents a house from the owner of the house and pays monthly rental fees for living in the house. After a given period of time, usually three years or so, the renter can decide to purchase the house at a price that the renter and owner of the house agreed upon at the start of the rent to own agreement.

Of the monthly rent paid to the owner, a fraction can sometimes go towards down payment of the house depending on the local laws and guidelines. Sometimes applying part of the monthly rent to the purchase price is now against the law because of a law passed by Congress called the Dodd Frank Law.

The Rent To Own Contract Agreement – How It Works Here In Blaine

The contract the buyer and seller draw up should be very clear. You should understand the nature and terms of the contract properly before signing it.  Make sure you ask the seller lots of questions if you’re not clear about anything at all.

This arrangement has got advantages for both sellers and buyers alike… but also some huge benefits. So understand both the pros and cons so you can make a great decision for you and your family.

The Financial Parts Of The Rent To Own Agreement

First, the seller has to set the purchase price and monthly rent for the house.

The Monthly Rent

The purchase price is usually retail value for the house in today’s market.  The monthly rent is usually a bit higher with a rent to own / lease option agreement than if you were to just rent a house normally.

Why?

Because you’re paying for the ability to purchase that house at the end of the agreement and you’re locking that house down so others can’t purchase or rent it during the entire term of the agreement.

The Purchase Price

The agreed and signed price and rent is settled and locked during the entire rental period of time, which is usually between one and three years.

The agreed price doesn’t change during the agreement based on market prices in Blaine, whether they rise or fall.  That’s one of the big benefits of buying a house here in Blaine with a rent to own… that you can lock in to buy a house at a price today… and not have to buy the house for 1 – 3 years… and that purchase price won’t go up over those years.

The Option Fee / Upfront Payment

There is an option fee that the buyer pays the seller. It is a set amount of money payable to the seller by the buyer before you move into the house. This amount can really vary based on who you’re working with and the house price… but a rule of thumb is usually 1-5% of the total house purchase price is what you can expect to pay upfront to enter the agreement… and this payment is usually non-refundable if you decide to NOT buy the house at the end of the agreement.

This option of buying a house in Blaine with a rent to own agreement is very good for buyers who would otherwise be unable to purchase a house or whose credit score wouldn’t meet the required threshold for a mortgage.

For sellers like us, the rent to own opens up the potential “buyers pool” so we can help more people get into great homes.

For buyers, it lets you work toward home ownership and have that sense of pride you feel when you own a home.

The End Of The Rent To Own Agreement… What Happens?

Of course the idea of getting into a rent to own home in Blaine MN is that during the rental term… you improve your credit and financial stability so you can get a normal home loan at a bank.

So during that whole period… you should be really working to improve your credit… save up money… and work with a local Blaine mortgage broker or bank to get pre-qualified BEFORE the rent to own agreement expires.

At the end of the rental period, you as the tenant / buyer have the choice to either buy the house at the price in the agreement… or you can walk away and not buy the house just like a normal rental house.

If you choose not to buy the house, no biggie at all.  You can move out of the house and onto another house… or under special circumstances you may be able to update the rent to own agreement to give you a bit more time to get qualified for a bank loan to buy the house.

With our local Blaine Rent To Own Program our ultimate goal is to help you reach your goal of home ownership. So we can be flexible often times if you need an extra few months to get things lined up financially and with the bank to close on the house.

Just like in any other way of buying a house in Blaine, there are mutual pros and cons for both the buyer and seller.

So just do your research… keep browsing this website and check out … or give us a call anytime at 612-840-6507 or shoot us an email on our Contact page to chat with us and our local rent to own program.

Last… have you found the Blaine rent to own house that’s perfect for you yet?  If not, join our Early Property Alert List below to get email alerts quickly when we have new rent to own houses in the Blaine MN area available.

See Available Rent To Own Houses In Blaine MN Here >>

The Costs of Rent to Own Housing – For the Blaine MN Area

Owning a home — it’s part of the American Dream!

Home ownership gives a sense of freedom, security, and permanence.

Americans dream of growing up, finding a home, and starting a family; they dream of owning their own piece of land and proudly knowing “it’s mine.” Millions of families want a nice home, a white picket fence, a place to rest after a hard day of work, and a place to raise their families.

It’s no wonder that pioneers and settlers came to America to escape the over-crowded rental slums of the Old World and to tame and claim their piece of this vast land. Even today, newcomers to America are attracted here in part because of the opportunities for a better future — which includes owning their own home.

The American Dream Is Changing…

While home ownership continues to be a high priority among many Americans, the American Dream is evolving. There’s still plenty of land and places to live, but it’s evolving for other reasons:

  • There’s the growing number of Americans with credit problems — perhaps due to debt or poor choices or difficult circumstances or even just low paying jobs.
  • There’s the growing number of banks that reject loan applications because they don’t meet the bank’s tightening loan requirements.
  • There’s a trending increase in the number of lower-paying jobs, while higher-paying jobs are vanishing or being outsourced overseas.
  • And the economy is on shaky ground, with one recession barely over and another one threatening to strike.

Although these might not be ideal circumstances, this is the reality we live with. As a result, two things are happening:

  1. House buyers are trying to find creative ways to acquire a home to live in, even if their credit isn’t at the level that a bank is looking for.
  2. House sellers are trying to find creative ways to sell their house because there aren’t as many buyers.

This creativity has led to a new opportunity for people to buy houses even when they may not be able to apply for traditional loans. And that’s how the American Dream is evolving: people still want to own homes (and can!) but there are new ways of buying those homes…

Rent to Own Housing in Blaine and Other Areas

In a traditional house purchase: the buyer goes to a bank, pays a down payment, and gets a mortgage loan for the remainder of the amount owed on the house they’re buying.

In a rent to own agreement: the buyer who may not have perfect credit works directly with the house seller — to rent a house for a period of time while they build up their credit so they can quality for a mortgage loan.

This works well for everyone!

  • For the seller, it gives them access to more potential buyers.
  • More importantly, for the buyers, it creates a new way to get into a house sooner — a permanent address in the house you’re likely going to buy, a sense of ownership before you even own the house, and an opportunity to work on your credit.
  • Banks love it because it means more people can qualify for loans, too!

Just imagine: if you’re someone who wants to own a home but you can’t get a traditional bank mortgage right now, you might have thought that living in a permanent home was years away. Well it doesn’t have to be: you can get into your permanent home now, enjoy the sense of ownership right away, PLUS you’ll have a stable address (which can help to contribute to a higher credit score).

Want to see what houses we have available for rent to own in Blaine? Click here and enter your information and we’ll show you what’s available.

What are the Costs of Rent to Own Housing in Blaine?

In a rent to own agreement, a buyer would move into a home, paying rent, and building credit towards a down payment to ultimately purchase the home. This is a valuable option for families who may not have the necessary credit score to get a traditional mortgage.

The price varies widely, depending on a number of factors, and each rent to own arrangement will be governed by the details described in the agreement. But in general, this is what you’d be looking at…

First, you’ll pay a regular rental amount (just as you would if you were renting anywhere). This amount goes towards the rent and upkeep of the property, just like a regular rental.

Second, the costs of rent to own housing in Blaine may be higher in some areas… but for a very good reason. In some cases, rent to own rental amounts may be slightly higher versus rental rates you get elsewhere, and this is influenced by a few things — such as the neighborhood the house is in, the condition of the property, the length of the rental period before purchase, etc.

As well, there’s the lease option portion of the agreement, which allows you to buy the house at the end of the rental term. This is built into the cost of rent and, in some cases, a portion of your monthly rent will be applied to a down payment on the home. (Check with the landlord because this is not always the case).

Example: You rent a house for $1,000 even though other houses in the area rent for $900. This extra $100, though, is applied to your down payment and accumulates month by month for 3 years until you are ready to purchase the house.

Important: these vary from one rent to own seller to the next, so make sure you talk to the seller about how the costs of rent to own housing in Blaine when you’re looking to buy.

While it’s possible that in some cases you may pay slightly more to rent to own a home each month, the savings in the long term could be significant. This is because many sellers will set a predetermined price on the house, locking in protection against housing market fluctuations.

Example: You’ve agreed to rent-to-own a home for three years, before exercising your option to purchase. You come to an agreement with the seller on a price at the end of that term of $200,000. Let’s say that at the end of your rental term, the housing market becomes extremely competitive and surrounding homes are selling for $300,000. As a buyer, you’ll be saving $100,000 on the cost of your new home simply by renting to own and locking in the price.

Rent to own — it’s a great new way that families are getting their own piece of the American Dream even when circumstances have prevented them from doing so in the past.

Want to learn more about our rent to own program or find out what the costs for rent to own housing in Blaine are? Click here now and enter your information or call us at 612-840-6507 and we’ll be happy to walk you through our process.

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