I am 27 and I am going to start working right now as a Medical Resident. My gross salary is going to be $46,398 in the first year. The house that I’m interested in is $855. My other debt is a student loan which I will pay $248.
The immediate answer is a profound NO! Rent with an option to purchase can be a complicated venture. For example, the house in which you like rents for $855 per month but the actual market rent for a similar property may be as low as $655 per month. Your agreement may state that $200 of your monthly rent will be credited back to you. At the end of a one-year term, you would’ve accumulated $2400 which can be used toward your downpayment. However, there will be strict stipulations in the contract. It may state that if you’re delinquent on the rent twice you’ll forfeit the money. Often times the stipulations are unreasonable, and are designed to benefit the seller. In addition, most first-time homebuyer programs do not recognize rent-option contracts because of the risk.
You should exercise some discipline and rent a house for market rate, and save your own money for downpayment. By doing this, you will not lose your money if you have a temporary financial hardship.
Feel free to reach out if you want a more comprehensive, customized answer.
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