Rent to own in Washington state – a guide for newcomers

Alt feature: A row of homes in Washington state that could be great for a rent to own option.

If you’re thinking of purchasing a home, you’re undoubtedly familiar with everything that comes with it. One of the most significant issues that homebuyers face is the mortgage necessary for financing. Aside from having a good score, it would be best to have enough cash for a down payment. However, these concerns don’t need to be your problem. If you’re not fully set on going the traditional round, there are other options to consider and discuss. A great alternative would be to do this by making a rent-to-own agreement. This means that you’d rent a house for a specific period while having the option to purchase it before your lease expires. You, of course, won’t be obligated to do so. If you’re considering a rent to own in Washington state, we’ve gathered some information that should help guide you to making the right decision for you.

Make sure that this is the right thing for you

Although renting to own in Washington state is great, and there are many reasons you should do this, that doesn’t mean you should rush into anything. The first thing that you should undoubtedly be aware of is that you’ll be considered a renter and not a landowner. This means that all your rights will be in accordance with the fact. Make sure that you know all the potential obligations that come with living in a rent to own in Washington state. Sometimes people invest quite a bit of money in a home that they don’t end up purchasing. Think through all the pros and cons before heading into this adventure. 

Some risks come with this style of living, just like there are with any other. However, most of these risks come from the fact that people don’t read through their contracts carefully enough. Don’t make this mistake. Overpaying for a down payment is also a frequent mistake. Avoid these potential problems by asking someone with experience for help. 

Should I get a premium payment on my rent to own in Washington state?

One of the perks of going into the rent-to-own program in Washington state is that you could also get a premium payment. In simpler words, this is a way to call dibs on a property. Without actually being obligated to purchase it, you’ll have insurance that the option to buy a home won’t go to a higher bidder. You’ll be the one who gets to purchase the place before your lease expires if that’s what you want to do. However, you should know that this sum is non-refundable and needs to be paid upfront. The home price will then be locked on the price that you’ve agreed upon. Premium payment is usually somewhere between 2% and 7% of the purchase price.

Getting insurance

Although a logical conclusion would be that deciding to rent to own in Washington state would place you in a different group than a regular renter when it comes to insurance, it really doesn’t. Insurance companies treat rent-to-owners the same way they would a renter. Before entering any agreement, ask for the type of homeowners insurance that’s presently active. Make sure that you have enough coverage that’ll protect you if something were to go awry. If the homeowner has a policy that meets your needs, that’s great. However, if that’s not the case, make sure to bring it up and find something that suits you better. 

It is the same when moving into your new place. You will want moving insurance that will keep you protected in case there is trouble. At the end of the day, make sure to make the right choice and not settle. This coverage could mean a lot if something unexpected were to happen.

Make sure that you look for the right type of lease

While buying your dream home, people sometimes get carried away. Make sure to do your research thoroughly and know all the options that you have. There are two main types of contracts when renting to own in Washington state. Some will suit you better than others. 

The lease option type is what you should look for. It means that you have the right to purchase a home once the lease expires without being obligated to do it. If you change your mind, this option will simply expire, and you’ll be free to walk away. Still, know that this isn’t always the case, and don’t forget to double-check your contract before signing it. If you’re not too experienced in deciphering leases, make sure to seek support. Find a qualified real estate attorney that’ll help you with all the fine print. 

Agree upon the purchase price ASAP

While renting to own in Washington state, you’ll need to agree upon a purchase price. You should do this ASAP since it has to go into the rent-to-own agreement. Know that this price is often higher than the current market value of the home. Take this into consideration while you’re looking for the right place. Of course, there are some situations where this sum is left up for debate, and people circle back to it once the lease is expired. Although this can be helpful since you’ll be aware of the current market value, certain risks come with it that don’t make the potential upsides worth it. You don’t need to add this to the list of things to watch out for when buying a rent-to-own. Especially if you’re looking at a home where the market value is trending up, make sure to ask for a “locked-in” purchase price.

Info that’ll help you understand the contract better

  • Make sure to comb through all the deadlines and see if they match what you’ve had in mind.
  • Aside from making sure that the previously agreed-upon purchase price is stated, you need to check to see if rent payments are in order as well
  • Look for any details that may concern you. For example, if pets are allowed.
  • Does the lease state who has the responsibility when it comes to maintenance, property taxes, and similar subjects?
  • Make sure that you know how to exercise your option to purchase. In some cases, owners demand that you provide notice in writing where you’ll state your intent.

All in all, if you’re looking to rent to own in Washington state, it could be an excellent solution. As per usual when big life decisions and significant investments are at hand, good information is your best friend. Thus, do thorough research, inform yourself well, and have reliable experts to help you through everything.

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