Rent to own home is the one of the option to buy a own house with bad credit score. Rent to own contract can benefit both buyer and seller. At the same time, it's not like a normal rent/lease contract. These type of contract are complicated than normal lease contracts and both buyers and sellers can get some problems if their directions were wrong.
Some portion of the money you pay in rent will go toward the down payment. With any reasons if you fails to execute the option to buy home at the end of the lease, you won't get a refund. So you lose all of the extra money you paid.
You probably won't get loan until your option to buy home expires.
Some times it is risky for buyers if the seller lose the property through foreclosure.
Price can be fixed at the beginning of the contract, so you can't change it later even if the home value goes down. So lock in the price is advantage as well as disadvantage to the buyer.
You must pay rent on time. If you don't pay rent on time, you may lose contract.
Rent to own home type of contracts are also limited.
Some of Potential Risks for Buyers :
Some portion of the money you pay in rent will go toward the down payment. With any reasons if you fails to execute the option to buy home at the end of the lease, you won't get a refund. So you lose all of the extra money you paid.
You probably won't get loan until your option to buy home expires.
Some times it is risky for buyers if the seller lose the property through foreclosure.
Price can be fixed at the beginning of the contract, so you can't change it later even if the home value goes down. So lock in the price is advantage as well as disadvantage to the buyer.
You must pay rent on time. If you don't pay rent on time, you may lose contract.
Rent to own home type of contracts are also limited.