Homeownership has long been the American dream, the ultimate signpost to a working man's success. Perhaps not anymore, though. Economist Daryl Fairweather says homeownership isn't for the middle class anymore; it's for the upper class.
The primary reason many people can't buy homes is because banks and lenders won't approve their loans. This is a shame because the same people can already afford high rental payments. With that being the case, there's an alternative pathway to ownership: rent-to-own homes.
What are rent-to-own homes in New Brunswick, and are they a worthwhile way to reach that American dream? Today, we take a closer look.
What Are Rent-to-Own Homes?
Rent payments and mortgages are surprisingly close in cost. For reference, a typical 30-year fixed mortgage usually runs less than $3,000. So, the idea is that rent payments could contribute to partial homeownership, almost like a mortgage.
Renting to own is an agreement between the owner and the renter. Think of it as an extended lease where the renter agrees to a higher rent price. This rent slowly contributes to the selling price of the home until paid off.
Once the renter has fully paid off the place, a contract is signed to transfer ownership. It works very similarly to the same bank transfer after a paid-off mortgage.
Benefits of Rent-to-Own for Buyers
The main benefit here for buying a home is bypassing mortgage approval. Banks and lenders are very strict with mortgage approvals. Their decisions usually come down to income, even if a person can theoretically afford a home.
However, this will depend on the owner's willingness to sell. Rent-to-own is a fairly uncommon practice in the industry. It's a long-term arrangement that many investors eschew in favor of a sale.
Benefits of Rent-to-Own for Sellers
Selling is a long, complicated process that involves a lot of work on real estate listings. A house can sit on the market for months or years. During this time, you still have to pay maintenance and property taxes.
Rent-to-own allows you to secure a steady income with the promise of selling the home later. Rather than a huge lump sum from the bank, you get steady monthly rental payments. Then, at the end, you relieve yourself of that tax and maintenance burden.
The process is excellent if you have good tenants already. It's a lot less stressful than dealing with only potential interested buyers and investors. Given how many mistakes real estate investors commit, it's a less accident-prone process overall.
Consider Rent-to-Own With PMI Central New Jersey
Rent-to-own homes are the perfect blend between renting and eventual home ownership. They make it easy for people who have been denied mortgages to secure their own place. At the same time, they let owners part with their properties in a way that's more agreeable.
PMI Central New Jersey in New Brunswick has 20 years of property management experience and state-of-the-art technology at its fingertips. Our unmatched customer service and excellent brokerage services put you in good hands. Don't wait, grab our free rental analysis now.
