Most of us are very familiar with the term “rent to own”. Places such as Prime Time and Rent A Center have built an empire with rent to own merchandise, although the buyer normally ends up paying double what the merchandise is actually worth. While this may be great for those who have bad credit, most of us prefer to avoid going this route. Homes are no exception, especially if you are buying a home on a rent to own basis.

Even though rent to own may be good for a short period of time, it proves to be a very expensive way for someone to buy something they intend to keep. Rent to own merchandise for example, may sound quite compelling at a few dollars a week. The agreement in generally for around 15 – 20 months, which is where the company makes their money. Although you may be paying just a few dollars a week, the total amount quickly adds up to easily twice the cost of the item.

Along with paying rent, you will also have to pay applicable sales tax as well. Like merchandise, renting own real estate has its disadvantages. Even though it can be great for those with not so big credit, you’ll normally end up paying back a lot more than you would with a mortgage. You’ll still have to pay back your lender with a mortgage, although that amount won’t be nearly as high as it would if you decided to get a house on a rent to own basis.

In most cases, the owner puts up rents to own houses on the market. This way, you’ll deal in direct with the owner. It will start out as a traditional lease, and then proceed to a rent to own basis when you decide you want to keep the home. You and the owner will then try to come to an arrangement, which will normally be quite a few years. Some owners are more flexible and will work with you just to get the price they want for their home, while others will charge you quite a bit more, in order to make more profit.

If you have bad credit and cannot get approved for a mortgage, then rent to own would be the next very best option. Although some do not like to do it due to the price, for many it is a better alternative than an apartment. With rent to own houses you always pay money towards the home, instead of just paying rent. In some cases this is fine, although you should make sure to double check with the owner before you agree or commit to anything. This way, you will know how much you will be paying for the home – and for how long.