The Closing Proccess in Rent to Own

If you’ve signed a rent to own contract or are planning to sign a lease option in the future, your overall goal is to reach the end of the lease having followed the terms and conditions in order to avoid any complications so that you can purchase, or close on, the property. The closing process of a rent to own contract entails the renter/buyer paying the remaining balance of the house by the date determined in the contract in order to own the house.

Timing

If you’ve already signed a rent to own contract, and you want to buy the house, then you have the option to close anytime during the lease, or wait until the end of the lease term. Keep in mind that at the end of the lease you can also choose to not purchase the house, but this will be at your expense having already made payments towards it. Also, you will only have the option to buy the home if you’ve kept to the terms of the lease, which often includes keeping the home in good shape and making all payments on time.

Financing

The closing price of the house should have been previously negotiated and listed in your rent to own home contract. It is up to you to come up with the remaining balance of the money, be it your own savings or getting a new loan.

If you plan on getting a loan, start the process early, giving yourself at least 90 days before the end of the lease. This will give you enough time to get the loan processed and deal with any complications that may arise. Additionally, you may want to start contact a mortgage broker when you first move into the property. A good mortgage broker will help you clean up your credit during the duration of the lease so that you will have no issues qualifying at the end.

Complications

It is important that you read through the entire rent to own contract and preferably have a lawyer look it over before signing to avoid complications which may occur towards the end of the lease. Some rent to own scams, for example, will allow you to live in and make payments on the house up until you’re nearing the closing process. Scammers may then use a loophole in their contract to claim that you violated terms of the contract and evict you, nullifying the payments you’ve made towards the house. The house can then be used for another rent to own scam. Looking over and clarifying the entire contract can help you avoid scams and complications.