Rent-to-own deals have been around for years, primarily helping buyers who struggle to save for a down payment. In these agreements, a portion of the monthly rent goes toward the eventual purchase of the home. Traditionally, this has been a path to homeownership for those who might not otherwise afford it.
Now, some affluent buyers are taking advantage of rent-to-own, but for different reasons. They don’t necessarily have trouble affording a home, but the high cost of borrowing makes purchasing less appealing. Many believe interest rates will drop in the future, making financing more favorable. By renting to own, they can lock in the home’s price, move in immediately, and delay closing until they have the opportunity to secure better loan terms.
Mortgage Rates
Continue to Fall
As the spring homebuying season gets underway, the 30-year fixed-rate mortgage saw the largest weekly decline since mid-September. The decline in rates increases prospective homebuyers’ purchasing power and should provide a strong incentive to make a move. Additionally, this decline in rates is already providing some existing homeowners the opportunity to refinance. In fact, the refinance share of market mortgage applications released this week reached nearly 44%, the highest since mid-December.
