The concept of “Rent to Own” has become increasingly popular in Illinois. Also known as lease-to-own, this system presents an alternative route to home ownership. It provides a solution to those who wish to become homeowners but are currently unable to secure traditional methods of financing.
There is a wide variety of rent to own homes available throughout Illinois. They vary greatly in their features and age:
Newly Constructed Homes: These homes have just been built and are ready to welcome their first occupants.
Pre-Existing Homes: These homes have a history and have accommodated previous occupants. Despite their age, they often have unique characteristics and charm.
Whether you are looking for a brand-new home with modern amenities or an older home with lots of character, there’s a rent to own option in Illinois to suit your preferences.
What is Rent to Own?
This innovative approach to home buying involves a tenant renting a home with an option to buy it at a later date. Rent to own allows potential homeowners to lock in a purchase price, while giving themselves time to improve their credit scores or save up for a down payment.
Key Components of a Rent to Own Agreement
Lease Period: Typically, this period ranges from one to three years, during which the tenant rents the home.
Purchase Price: The tenant and landlord agree on a purchase price for the home at the beginning of the lease. The price remains stable throughout the lease period.
Option money: An upfront, non-refundable fee paid by the tenant to the landlord. It’s often a percentage of the home’s agreed-upon purchase price.
Rent Premium: This refers to the portion of the monthly rent that goes towards the home’s equity or down payment.
How Does It Work?
A Rent to Own Agreement is a contract between the buyer and landlord. The agreement outlines the terms of the lease, including the rent premium, purchase price and option money. The contract includes information about what happens if either party defaults on their obligations.
As a buyer, you’re responsible for all the normal costs of renting a home. You pay your rent and utilities, and if something breaks in the house, you need to fix it. If you want to make improvements to the property (such as painting), you’ll have to negotiate with your landlord before doing so.
These terms include rental cost, future purchase price of the home, and the period (usually 1-3 years) in which the buyer may choose to purchase the house.
Once the agreement is in place, the buyer pays regular rent. A portion of this rent will be set aside as “rent credits,” essentially a savings plan that will be used to help buy the home later.
When this predetermined period ends, it’s decision time for the buyer. They can choose to buy the house using the accumulated “rent credits” as part of the payment.
The buyer becomes the sole owner of the house once they choose to buy it, secure the remaining funds needed, and complete the purchase process.
If they decide not to purchase the house, they lose these accumulated credits.
Benefits of Rent to Own in Illinois
No Need for Immediate Financing: With rent to own, you get to move into the house you plan to buy without having to secure a mortgage immediately.
Credit Score Improvement: Rent payment history contributes positively to tenants’ credit scores, helping them qualify for a mortgage in the future.
Locked-in Purchase Price: Regardless of real estate market fluctuations, the agreed purchase price will remain the same.
Ready To Own Your New Home?
With our rent to own homes listing in Illinois , you can find the perfect house to rent and then purchase it at a later date. You’ll get to enjoy all of the benefits of home ownership, including better credit scores and lower monthly payments.