Title
NEWLY REMODLED READY TO GO FOR YOUR FAMILY
Basics
3 Bedrooms, 3 Bathrooms, 2 car attached garage, 1525 Sq Ft (approx)
Pricing Information
266,900, 8,600 deposit
Pet Policy: Call for details
Avaliability
Avaliable Immediately
Title
YOU HAVE COME TO THE RIGHT PLACE
Basics
2 Bedrooms, 2 Bathrooms, 2 car attached garage, 1630 Sq Ft (approx)
Pricing Information
179,900, 5,000 deposit
Pet Policy: Call for details
Avaliability
Avaliable Immediately
How does a Rent to Own, Lease Option work in Minnesota?
'Lease-option' or more commonly called a Rent to Own describes the process whereby you are only buying the right to buy a home at some time in the future at a given price (or again, at a price to be determined). With a lease option you are under no legal obligation to buy the property ('exercise your option') if you determine that doing so is not in your best interest.
The following is an example (even numbers used for example purposes)
Rent to Own: 3 bedroom/2bath house with 2 car attached garage
Rent to Own Terms
Length: 2 year contract for rent with the Option to Purchase anytime after 1 year
Down Payment: $6,000
Rent: $2,000
Rent Credit: $300
Final Purchase Price: $300,000
Above are the terms of the contract, now we will explain each item.
Length: We usually set the length of each contract at 2 years. This seems to be the length of time that works best for most people. It allows you the needed time to build and/or fix credit problems.
Down Payment: Instead of paying the traditional security deposit for renting, you will pay a Down Payment. This is a non-refundable amount in which you put down to 'lock' the purchase price. The Down Payment will be credited back to you upon execution of the Option to Purchase. If you do not execute the Option to Purchase the property, you lose this money.
Rent: Is just like the traditional rent payment, this is the money you will not get back.
Rent Credit: If you have a mortgage payment on a home that you own, part of the payment goes towards the amount of money borrowed (principle) and part of the money is used to pay the interest on the loan. Rent Credit is comparable to the principle payment on a home loan. Every month that you pay rent, the amount of the Rent Credit gets credited towards the final purchase price. Just like the Down Payment, if you do not purchase the property, you will forfeit that money which was credited towards the purchase.
Final Purchase Price: This is the amount that you will be purchasing the property for at the end of the 2 year contract. At the closing table, when you purchase, is when you will be credited with your Down Payment and all of the Rent Credit that has accrued. This money will pay for your Closing Costs and your Down Payment on your home loan.
Rent to Own : Putting it all together
Now that we know how all of the terms and conditions work, let's put the numbers to them.
Melissa and Jack is going to participate in the Rent to Own Program in Minnesota for the example that was listed above.
She pays the Down Payment of $6,000 on May 17, 2008. On June 1st, 2008, when she moves in, she pays her first month's rent of $2,000.
Two years go by, Melissa and Jack has paid her rent on time, every time. In the mean time she has worked to build her credit score. She has gotten approved for a home loan on the property.
On June 1st, 2010, Melissa and Jack is at the closing for her home in which she is now going to personally own.
The purchase price of the home was $300,000. She is credited back the $6,000 Down Payment and $7,200 worth of Rent Credits she received over the 2 year period. Melissa and Jack is now purchasing the home with a loan amount of $286,800. Melissa and Jack leaves the closing and she did not have to spend any money out of her pocket to complete the purchase. Another successful way to buy real esate by rent to own Minnesota
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