Everyone would like to own a home at some point in his or her life. After all, renting houses might only be lucrative for a specific period of time. From enjoying more privacy to having the much-needed freedom to do what you want at home, owning a home has many advantages. This is the reason why most people invest more money whenever they want to buy a home. However, these homes come with a price tag that might not be pocket-friendly to all when buying at cash. As a result, most people normally choose to rent to own mobile homes. Here, you will have the opportunity to rent a mobile home for several years and thereafter get the chance to secure the home after completing the entire payment as agreed.
However, you must note that unlike traditional homes, the landlord of your rent-to-own home is not the real owner of the land it sits on. Although the landlord is responsible for paying the land, you should understand how that contract works because it might be an unknown added expense for you. This article will outline the advantages of considering rent-to-own mobile homes, among other considerations.
Why You Need Rent To Own Mobile Home
There are many reasons why you might consider rent to own mobile homes. Some of these reasons include:
1. If can’t pay large down payment
Most people normally find it difficult to own their first home due to the cost of the down payment involved. If an average home costs more than $360000, you might have to pay a 5% down payment for you to own a home. Such figures might be unrealistic to many people and thereby curtail their dreams of owning a home.
However, with a rent-to-own arrangement, you will be able to get home and rent it for some time and later own it fully without paying large down payments. As we speak, mobile homes are relatively cheaper compared to traditional homes. Therefore, you will still have the opportunity to save more on cost.
2. If you can’t get financing yet
Most Americans tend to face this problem whenever they want to buy a home. In fact, most of them have credit issues. Earlier on, those people with semi-credit issues used to get the much-needed loan from banks to finance the purchase of their homes. However, after the housing bubble busted, banks now became keener with who they issue loans to.
As a result, if you do not have a good credit score, chances of getting a mortgage loan are very slim. In this case, you should consider rent to own mobile homes. By considering this option, you will have time to build your credit score and this might be a lifesaver in case you want to buy a home in the future.
3. If you are finding it hard to save fast
Some people normally find it difficult to save money to invest in a home. If you belong to this category, you should consider rent to own mobile homes. Here, you can trust that some of your rental payments will act as a deposit for your mobile home. Over time, you will be able to accumulate the much-needed money to own your home of choice.
4. Rent-to-own mobile homes help you develop equity in your own home
The moment you sign your rent-to-own mobile home contract, you can be sure that you will be able to lock into the sale price at that day’s value. Here, you will not be gambling on the property’s price as you will get a fixed price for that particular home. After signing the contract, you can now start developing your home with the aim of increasing its value. That means you will have time to increase your home’s value before owning it with no additional cost from what you signed in the contract.
5. It increases your choices
Buying your dream home in cash is not a walk in the park. This is because it can cost more than you can afford. This will force you to buy a less costly home that suits your pocket. Fortunately, with a rent-to-own home, you can select any home of your dream since it allows you to pay in installments. It breaks the house’s cost down into smaller monthly payments, thus giving you a wide variety of choices to make.
Things to Consider When Renting to Own Mobile Home
Before you consider rent to own home, there are several considerations that you should make. This way, you will be able to make an informed decision. Here are some of the considerations that you should make:
1. How does the monthly rent and final selling price relate?
If you choose the rent-to-own arrangement, you should brace yourself as you might have to pay more in rent each month to the owner of the home. By doing this, you will be able to reduce the final sales price for the home. Over time, you might have the opportunity to purchase the home as the sales prices might be lowered by the extra money you had paid along with the monthly rent checks. However, not all companies accept this kind of arrangement.
Therefore, you should ensure that you know the final sales price of your home of choice and the monthly rent payments that you need to make. Ideally, the rent should not be too much to the extent of straining your budget. If you are rational enough, you will be able to get value for your hard-earned money.
2. Understand the agreement
Most people normally avoid reading all the content in the agreement before signing it. In as much as you might be fatigued to read everything, you can consider reading the basic point so that you can make an informed decision. Since this is a legal document, you might have to abide to the terms and conditions of the home seller till the end.
3. Consider the ‘Option Premium’
Once you and homeowner sign the contract, you have to pay what is commonly known as option premium. Generally, this gives you the right to purchase the home once you have completed the rental period. It is imperative to note that this premium is not refundable. Even if you choose not to buy the house after the rental period, you will not get a refund. Therefore, you should brace yourself to pay about 5% of the home’s final sales price as the option premium.
4. Check the local real estate market
This is another consideration that you should make whenever you want to rent a mobile home, with an aim of owning it later. Remember that housing prices normally rise in value each and every year. Sometimes, the market can be sluggish. Therefore it is important that have this information on your fingertips.
Supposing the home that you are living in losses value in the coming years, will you still be able to pay the final sales price as agreed when you first signed the contract with the actual homeowner? Such considerations should not be overlooked.
5. Check the timelines
Before you start the rent-to-own process, both you and the homeowner normally sign a contract indicating the home’s final sales and the period that you will have to rent the home before you can actually own it. You should be keen to note the period that you have to rent the home so that you can weigh the options you have.
If you have to rent the home for many years, you might actually have to pay more money in the long run. Since your interest is to get value for your money, you should be keen to check this period so that you can be rational enough. Also, the monthly premiums should come into play as they will determine the period you have to rent the home before you can finally own it.
6. Consider legal guidance
For you to understand the contract more, you should consider getting the services of a real estate lawyer. The good news is that this professional will help you understand all the facts about the contract you are about to sign. Also, you have an opportunity to tell him or her all the concerns you have. This way, you will be able to make an informed decision.
How Can You Rent to Own a Mobile Home?
As you purpose to rent a home today with the aim of owning it later, it is imperative that you know how the entire structure works. Here is what motivates each party to enter into a rent to own agreement:
1. First, decide you want to own a mobile home
This is where it all begins. You should first decide that you want to own a home. You can either buy on cash or take a mortgage. Perhaps the two options don’t work for you; you can now choose the rent-to-own option.
2. Find a rent to own landlord
If you do not have money to pay upfront, look for a homeowner who is willing to allow you to move into his or her house, pay rent and own later. Search for rent-to-own mobile homes near me.
3. Sign your rent-to-own agreement
It is at this point that the potential home buyer and the landlord enter into a rental agreement. The agreement document normally stipulates the rental period, the premium amounts that you will be paying on a monthly basis among other details. It is important that you take time and read the document carefully so that you can know its ins and outs. By doing this, you will be able to make an informed decision. If you are not very conversant with the terms used here, you can seek the services of a real estate lawyer so that he or she can elaborate a number of issues for you. Below are the available types of agreements.
Types of renting agreements
- Short-term lease : This type of rental agreement normally states a fixed monthly rental rate for the entire duration of the lease. If you know that you are going to stay in a certain home or apartment for a short period of time, a short-term lease is the best option for you.
- Month-to-month lease: Here, you normally agree to rent a certain house and pay every month. If you consider this type of rental agreement, you should know that your rental price will be subject to change at any time depending on a number of factors. This kind of arrangement is ideal if you are uncertain about how long you intend to rent a certain rental unit.
- Subleasing : Also known as sublet, it refers to the process of renting a property under the original lease that someone else holds. Here, you will be working out the arrangements with the original tenant rather than the landlord. If you consider this kind of rental agreement, you should consider getting written consent from the landlord allowing you to reside in the house for the duration you had agreed with the original leaseholder.
- One-way leases : In this rental agreement, the landlord normally charges a termination fee or waives the deposit in case you choose to move out before the rental period is over.
- Fixed-term leases : These are generally rental agreements for a specified period of time. However, everything must be put into writing. Most people normally consider one-year lease under this agreement. During this period, the landlord cannot increase the rent or change the rules of the tenancy. On the other hand, tenants are expected to adhere to the set terms and conditions of lease for the full term or get penalized.
4. Pay for the option premium
Besides signing the rental agreement, you will have to pay upfront cash known as option premium since you have expressed the willingness to buy the house at a future date. Remember that this amount of money is nonrefundable even if you will not buy the house in the future. The cost of the option is normally negotiated between the buyer and the seller. In most instances, it ranges between 2% and 7% but can vary depending on a number of factors.
Advantage of Rent-To-Own Mobile Homes
- It is ideal if you have bad credit.
- Good option if you do not have all the money to buy a home upfront
- Allows you to have an opportunity to inspect and even live in the home that you ever wanted to buy before actually deciding to buy it or not.
- No price increment in case the house prices rise in the future. This way, you will save more.
- Reduced costs of moving in the future since you will live in a home that you will eventually buy after some years.
- It can help you build equity in the long run.
Disadvantage Rent-To-Own Mobile Homes
- In case you do not buy the home, you might lose all the extra money you had paid.
- Less control as you do not own the property yet.
What Happens If The Manufactured Home Park Terminates My Tenancy, During My Rent-to-own Contract?
In case your tenancy is terminated, the park has to refund all the rent-to-own payments that you had previously made during the term of the contract. If the park does not refund the payments and you are evicted, you should seek justice from the court. Here the court can actually award you the damages caused, including the amount of rent-to-own payments that have not been refunded by the park.
Buying vs. Rent to Own Mobile Homes
Buying a home is expensive, but if you have all the resources needed, it is better that you buy a home upfront as you will save more. Although renting might seem to be a good idea, you might spend more compared to the price of buying in cash.
Also, buying protects you from facing unpredictable rent increase in the future. However, if you do not have all the monies to buy a home, you can consider renting one and with an aim of owning it in the future. This option is also safe and convenient. After all, the monthly premiums might be a bit pocket-friendly to you.
Who is responsible for repairing a rent-to-own manufactured mobile home?
If you are renting a manufactured home, you will note that the landlord is responsible for making repairs unless you are responsible for the damage. This is because you are still not the homeowner until you have made all the necessary payments required in the agreement.
Is the manufactured home park required to offer me a lease?
Yes. Once you have signed a rent-to-own contract, the park will offer you a lease for the lot on which the home is actually located. In case the term of the rent-to-own contract is longer than the term of the initial lease for the lot, the park should offer you renewal leases.
Can the manufactured home park increase my rent?
Yes. However, the rent increase should not be more than 3% over your current rent. That said, you will note that some parks normally increase this rent by more than 3%. If this happens, the park has to show that the reason behind the rent increment such as an increase in operational expenses or an increase in taxes.
Can the manufactured home park charge me late fees?
Yes. Although this can happen, there are limits on how much the park can charge. For instance, there is no late fees that can be charged on any payment that the park receives within 10 days past the due date. However, if the payment is made more than 10 days past the due date, a late fee is normally charged on top. Here, a late fee of up to 3% of the late payment fee applies.
Do I need to pay anything to get the title transferred to me at the end of the contract?
No. You will note that the rent-to-own contract does not require you to pay anything so that the title can be transferred into your name. Also, once the contract has been completed and you have made all the necessary payments, there should be no liens, encumbrances or interests hindering you from enjoying the ownership of the home.
From what we have discussed above, it is evident that you can own a home even if you have bad credit. Rent-to-own mobile homes have proved to be a good alternative for those struggling to raise the much-needed capital to buy a home. If you meet your end of bargain and make all the necessary payments in a timely manner, you can be sure that you will eventually own the home that you have been leasing in the recent past. Consider rent-to-own mobile homes today and you will make your dream of owning a home a reality.