1. Test out the home and the location
If you are not completely committed to a home it may not be a good idea to make a major investment. A rent-to-own option will allow to live in the home and get a feel for the neighborhood without making a huge commitment.
Usually a rent-to-own contract is anywhere from 12-36 months so that gives you time to live there and decide if it is the final move you would like to make.
2. Save a down payment and build credit rating
Many people will opt for a rent-to-own contract if they need time to save up enough money for a down payment on a home or if they need to build their credit rating in order to qualify for financing.
When choosing rent-to-own options there is usually an initial fee and after the lease period, the fee can be applied to the purchase price of the home. There is also a higher rent so that the amount paid over the market value will also be applied to the cost of the home at the end of the contract. In this way the buyer is building equity in the home.
3. Minimum Out of Pocket Expenses
Typically when you buy a home, you need a down payment of at least 3.5% of the purchase price. You will also need to have enough cash to cover the closing costs. When you rent to own you will pay a security deposit plus the option deposit (an amount agreed upon that is fair for the seller and affordable for you).
4. Flexibility in Requirements
Restriction placed on the contract are up to the seller which generally means that there is more flexibility. You will be proving your ability to purchase the home by making on-time rent payments every month. The conditions of the rent-to-own are set out and agreed upon prior to the start of the contract and there is usually more wiggle room when you are dealing with a seller rather than just a bank.
5. Minimal Maintenance
While you are generally responsible for day to day care and upkeep of the home, if any major repairs are required they are usually the responsibility of the seller. So while you look after yard maintenance, if the roof starts to leak the seller would be responsible to get it fixed.
Of course, you have to make sure that everything is clearly outlined in the contract so that there is no confusion as to who is responsible for what.
While it may be nice to purchase a home if you are moving to Regina, Saskatchewan for a new job, it may be a good idea to make sure everything pans out the way you want it to first. If you get a transfer and you are not sure that it is where you want to lay roots, a rent-to-own property may be a great solution so that you are not tied into a mortgage that you can’t easily get out of!