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Pros And Cons Of A Rent To Own

By Elizabeth R. Elstien

Rent- or lease-to-own homes can help people who have poor credit or need more money for a down payment begin the path to homeownership. Designed for those who can pay a monthly "mortgage" installment, a lease-purchase option may be the ticket to homeownership for some. Understand the pros and cons of a rent-to-own purchase option in Texas to see if it's right for you.

How does a rent-to-own purchase option work?

Potential homebuyer/tenant begins a lease that should specify all terms and interest rates/fees related to the lease and purchase option and move into the home. There is normally an upfront options fee with a percentage of rent paid to be applied to the mortgage should tenant decide to purchase the home, often minus any maintenance expenses. A purchase amount and terms will be written into the lease-to-purchase option as agreed by both seller/landlord and buyer/tenant.

The option to purchase comes into play at a designated date as specified in the lease, usually when the lease expires, at which point the homebuyer/tenant will be expected to obtain a loan from a lender or walk away from the property. The lease may expire anywhere from one to four years.


  • Chance to live in the home before buying
  • Opportunity to get to know the neighborhood.
  • Time to build up your credit score.
  • Save for a down payment while living in the home.
  • Lock in purchase price and terms, as written into lease-to-own contract.


  • Pay higher than standard rent.
  • Must pay options fee along with normal move-in expenses.
  • Loan not approved by specified date.
  • Loss of money put into lease option if unable to get a loan.
  • Finding lots of problems with the home decreasing its value.
  • Maintenance expenses may come out of rent payments.
  • Scams are prevalent in rent-to-own lease options.

Wrap It Up

Look into a rent-to-own purchase option weighing the pros and cons. With today's sellers looking for options to sell their property, a rent-to-own lease option is a great way to purchase a home in the current market with less-then-stellar credit. It's a wise investment to have a home inspector check out your future home to ascertain its condition before entering into any contract. Read the fine print and have a lawyer of your choosing look the contract over if you are skeptical.

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About The Author

Elizabeth R. Elstien has worked in real estate for over 15 years as a real estate...

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