Many people may desire to buy a home; however, this can be difficult if they do not have an adequate down payment. In such cases, one option may be to enter into a rent to own arrangement.
If you are wondering “What is rent to own?” it is simply an agreement where a person is renting a house which they intend to buy. Under the contract, a set price is agreed to for the home and the monthly rental payments are given to the current homeowner to pay off the balance of the set price. Once paid in full, the renter effectively becomes the homeowner.
Rent to buy arrangements basically excludes the bank, and there is no traditional mortgage involved. The arrangement works best for those who haven’t saved up a large enough down payment to qualify for a mortgage.