Renting to own

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These deals, also called rent-to-own and lease-option, usually require buyers to pay extra rents each month plus up-front fees of about 5% of the purchase price. The regular rent then goes in owner's pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.

And, of course, buying down the price of the home works to your advantage in the long run.

Lawrence Jacobson, who is a real estate attorney in California says:

Lease option agreements, if properly drafted, by and large are an effective way of enabling people to buy who are having trouble arranging financing or coming up with down payments,

One of the biggest advantages of rent to own is that the potential buyer can build up their downpayments and also be improving their credit profile so that getting a mortgage can be easier to do.

There are also disadvantages to rent to owns, and we will discuss them tomorrow.