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What Are Rent to Buy Homes?

Buying a home may very well be the biggest purchase you will make in your life, and everyone knows that it is not an easy feat. There are many options available to the home buyer, though, and it is a matter of determining which option will suit your needs, preferences, and financial status the best.

One option is to make arrangements with the landlord, such that you pay for the rent plus a little extra. This little extra will go towards some sort of deposit for the home. The arrangement also includes the option to buy the home at the end of the agreed upon period. A critical element in this set up is the market price of the property at the time the agreement is made. Depending on the fluctuations in real estate prices over the years, renting to buy may be a good thing or a bad thing.

Let us say that the market price of the home goes up by the time the lease ends and the buyer has to pay for the home. This is good news for the buyer, obviously, as he is paying less for the home as compared to the current market value. On the other hand, if the market price of the home goes down - even below the market price agreed upon - the buyer ends up losing value on his purchase.

In a way, renting to buy can also pose a risk, but it can be an effective way to purchase a home while not laying out huge amounts of cash at the get go.

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