Due to the many potential homebuyers that are looking to get in on the incredible real estate deals out there, but are having a hard time finding the initial down payment, there has been a significant rise in interest for the rent-to-buy option.

This option normally requires the buyer to pay extra in their monthly rent and a small up-front fee, the normal rent cost goes to the owner and the extra monthly payment goes towards the purchase of the home. Sounds like a great deal?

There a few downfalls to this type of agreement that you should be aware of before you take this step. What happens if you fall behind on your monthly rent payments? There isn’t a whole lot of protection for a buyer in this type of agreement, if you are evicted from a rent-to-buy type of contract you will lose your initial up-front fee as well as the extra money that you included in your rent.

A typical rent-to-buy contract is written to close in 1-3 years, if after this time period you are unable to acquire a loan, again you will lose all investments that you have made towards the purchase of the home.

There is also the danger of a foreclosure scam. The owner that you are entrusting with your investment, could very well be going through a foreclosure and pocketing all of your money only to quietly disappear at the end of the contractual agreement.

When considering making one of the most important investments of your life, such as homeownership, it always best to hire a professional that can direct you through all the ins and outs of the market. CENTURY 21 Alliance provides some of the best of the best!