1. What is Rent To Own?

Rent to own is a type of agreement where a tenant rents a property with the option to buy it at the end of the lease term. Part of the monthly rent may go toward the future purchase price.

2. How Does the Calculator Work?

The calculator uses the rent to own formula:

Where:

• Purchase Price — The agreed sale price of the property
• Interest — Total interest over the term
• Down Payment — Initial payment made at signing
• Months — Length of the agreement in months

Explanation: The formula calculates the fixed monthly payment that will cover the purchase price plus interest, minus any down payment, spread evenly over the term.

3. Importance of Rent To Own Calculation

Details: Calculating the monthly payment helps both buyers and sellers understand the financial commitment and ensure the terms are fair and affordable.

4. Using the Calculator

Tips: Enter all values in dollars except for the term which should be in months. Ensure the down payment doesn't exceed the purchase price plus interest.

5. Frequently Asked Questions (FAQ)

Q1: What's typical for a rent to own down payment?
A: Typically 2-5% of the purchase price, though this can vary based on the agreement.

Q2: How is the interest calculated?
A: Interest is usually calculated based on the purchase price and term length, similar to a mortgage.

Q3: What happens if I don't buy at the end?
A: This depends on the contract - you may lose any extra payments made toward the purchase.

Q4: Are there advantages to rent to own?
A: Yes, it allows time to improve credit, save for a down payment, and "try out" the property before buying.

Q5: What should I watch out for?
A: Be aware of non-refundable option fees, maintenance responsibilities, and what happens if property values change.