 TITLE: What Are the Pros and Cons for Rent-to-Own? CONTENT: What Is Rent-to-Own and How Does it Work?\n-----------------------------------------\nA rent-to-own contract allows you to rent a home for a specified period of time while providing you the option to buy it before the agreement expires. It essentially takes a standard rental agreement and bakes in the option to buy the property at a later date. Depending on the contract, a portion of your monthly rent payment could be put toward the eventual purchase price, helping you save as you go while building home equity along the way.\nRent-to-own contracts make the most sense for folks who know they want to be homeowners someday, but aren't yet ready to take the plunge. Whether you need time to improve your credit or save for a down payment, this type of arrangement can provide some breathing room while you get your financial house in order.\nRent-to-own contracts generally fall into one of the following two categories:\n*   **Lease option**: You'll have the option to buy the home if you want to, but are under no legal obligation to do so. You can walk away after the lease is up if you change your mind.\n*   **Lease purchase**: You'll be legally obligated to purchase the home at the end of the lease agreement. If you abandon the deal because you no longer want it or are unable to afford it, you could be in for a legal battle.\nGoing with a rent-to-own contract doesn't always make financial sense. One metric that can help clarify whether it's more affordable to rent or buy is something called the price-to-rent ratio. Begin by taking the median home price in your area and dividing it by your annual rent costs. If the total is below 15, continuing to rent could be more expensive than buying. END