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How Rent To Own Eliminates Interest Rate Concerns For Buyers 

by | Sep 7, 2022 | Uncategorized

You hear it nearly every day on the news, how interest rates are going up. The concept of interest rates going up to slow down inflation and sky rocketing prices has been proven over and over again. It works and it’s already shown to work as home prices are already beginning to fall. With rates going up even higher, one would expect a recession or strong correction to impact the economy in the next year or so.

Rent to Own Gets Rid of Interest Rate Concerns

While some can wait out the market and see what happens, others are trying to take action now. They are looking to buy now in a specific area rather than spend the next year paying rent. Additionally, there may be better advantages for them to buy a home now, including if they just got a major increase in pay or need more space for their family. The reasons for buying a new home are abundant, but the options of buying one are limited based on inventory and your status as a potential buyer.

Without established income, money to put down, a strong credit score and plenty more, your chances of buying a home right now are slim. Why? Because inventory is still low and with low inventory, prices will remain higher and candidates will still need to be able to prove they can meet these requirements. Along with that, you have to pay a higher interest rate.

How Rates Impact Home Sales

Interest rates are impacted by a variety of things but the key factor has to do with what those rates are set at to begin with. If the rates are increased in order to slow down the housing market, the concept is that you will pay more for the same purchase, meaning you will not be interested or unable to pay for the property. With a smaller market of qualified buyers, prices will eventually go down.

Interest rates are so substantial in the cost of paying a mortgage off that it can literally cost you thousands of dollars extra a year if the rate were to go up a single point. That’s how impactful these numbers are on your lives and your ability to buy a home. If you are trying to buy a property and based on the asking price and what you are putting down your monthly payment would be $2,000, but a higher rate makes that payment $2,250, that small difference may push the transaction to be too expensive for you to get lender approval.

How Rent-To-Own Gives The Buyers The Advantage

As with any type of market or economy, there are people who will have more advantages than others. Because home prices are going down, homeowners who are trying to sell are going to have a more difficult time of finding buyers right now, especially ones willing to pay inflated costs at higher rates. In order to get immediate and fair value for their property, their best option may become to offer the home in a rent-to-own situation.

Through rent-to-own, the buyer has the unique advantage of being able to pay a smaller down payment if they choose but also pay what they owe on the property in the form of rent and pay off the debt faster and with no interest. If raising interest a single point can cost someone thousands of dollars or more, imagine what not having to pay any interest can save a buyer?

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