Rent-to-buy homes provide some additional options for real estate transactions which can benefit both parties in today's real estate market. A rent-to-own transaction can allow a potential buyer who may not have the capital, or credit needed to buy a house to enter into an agreement to buy a home/property. By drafting a fair contract that can protect both the seller and buyer, you can generate income for the seller and savings for the buyer while securing viable interest in the property

In a traditional rent-to-buy agreement the landlord/seller usually requires a deposit. Depending on the terms of your agreement; this deposit can be waived, or rolled over into your monthly rent-payments. A deposit on a rent-to-own is often called option money to secure the tenants/buyers option to purchase the property at the end of a set timeframe.

Most rent-to-buy contracts are fairly short term of one-to-three years. However all terms of the contract are negotiable, so a longer time frame can be created if it works for you. In all rent-to-own contracts there must be an agreed upon price for the sale of the property, which is usually established in the rent-to-buy agreement. There are many other details that go into a rent-to-buy contract and both parties should have either legal counsel or a professional real estate agent help with the wording and drafting of the contract.

Having a less-than-stellar credit score can get in the way of many things, including home ownership. However, bad credit does not mean you can't get the home of your dreams; a rent-to-buy option may be the perfect opportunity for you.

If you have bad credit and think you'll never own a home, it's time to perk up. A rent-to-buy agreement may be the perfect alternative solution to homeownership. There are two types of agreements that can help you own a home. The two agreements are known as a "lease option" and a "lease purchase."

If you choose the lease purchase agreement, you agree to rent the home for a set amount of time before actually purchasing the property. The lease purchase option requires that before the lease expires, you must purchase the property which means you would need to qualify for a mortgage before the end of the lease and purchase the home in a traditional way.

The good thing about a rent to own agreement is that you can move into a house right away, with several years to work on improving your credit score and/or saving for a down payment. You also can lock in the price you would like to pay. You and the seller will draw up the agreement, which will include important terms that should be favorable to both you and the seller.

Be sure you speak to a professional to help draft a contract that protects you and your rights. Many states will have their own regulations, so be aware of your local laws as no two rent-to-own contracts are alike.

When discussing down payments on a rent-to-buy home, it's important to understand how a rent-to-own home down payment differs than a traditional down payment. The term “down payment” can be misleading. There is a difference between the down payment on the purchase of a house/property and a down payment to secure a rent-to-buy option.

Typically, in a rent-to-buy agreement, the tenant/potential buyer can move into a house right away. This gives potential buyers several years to work on improving their credit score and/or saving for a down payment to purchase. However, this type of contract may require tenants to pay a one-time (non-refundable) fee called “option consideration fee”. This helps to secure the option to lease or purchase the house in a rent-to-buy agreement.

It's not as simple as paying rent and then one day owning the home. There are different terms and conditions which must be met, in accordance with the negotiated agreement. After a set time you may have the legal obligation to be able to secure a traditional mortgage from a lender. Therefore, be sure you can meet that requirement and get your finances, credit or savings in order,

Rent-to-buy is not easy and there can be pitfalls and risks, make sure you research all the pros and cons so that you can create the best deal for you and remember to keep working to save for when the lease term is up so you can fully purchase your dream home.