Rent-To-Own For Buyers
Do you dream of owning your own home? A place where you can grow your family and build memories? If you are tired of paying your landlord’s mortgage, are unable to get a mortgage due to poor or no credit history, or don’t have the 5-20% for a down payment then a Rent-To-Own program may be right for you.
With climbing house prices and tightening lending criteria it is becoming increasingly difficult to purchase a home today. If you are tired of paying rent, and essentially throwing your money away, then a Rent-To-Own program could be for you. Through our Rent-To-Own program we can put you in a home today and set you on a clear path for success to qualify for a mortgage and purchase the home tomorrow.
How Does A Rent-to-Own Program Work?
No Rent-to-own program is the same. Rent-To-Own programs are flexible and the way they’re structured depends on the agreement made between the ‘seller’ and the ‘tenant-buyer’. We primarily use a Tenant Buyer first approach. Before purchasing a property, we will work closely with you to assess your financial situation, assess what you can pay for a home at the end of the Rent-To-Own program and then help you find the right property to move into, call home today and purchase tomorrow. Throughout the process we work with you to ensure you are continuing to take the steps to keep on track with your finances from the beginning to the end of the Rent-To-Own program.
Rent-To-Own Step By Step
If, after learning about our Rent-To-Own program for Tenant Buyers, you are interested in purchasing a home with us, the following are the steps you will take in our program:
1. Initial Consultation: Start with a free informational call to learn about the RTO program. Then, fill out a pre-qualification questionnaire and let's discuss on a Rent-To-Own Blueprint call to assess your current financial situation and housing needs.
2. Financial Qualification: Our trusted mortgage broker will further evaluate your financial standing, offering a clear roadmap to qualify for the Rent-To-Own program.
3. Tenancy Qualification: Fill out a standard rental application and provide necessary references. We want to ensure a good fit for all involved.
The Home Purchase
4. Pre-house Shopping Planning: We will work together to finalize the details of your Rent-To-Own program and identify your ideal property criteria.
5. Shopping: Begin the exciting journey of shopping for your future home, supported by our expert realtor.
6. Purchase Offer: Once you've found the perfect property, we’ll put in an offer and finalize all necessary agreements.
Moving In and Program Period
7. Conditions Removal: After a successful property inspection, appraisal, and financing period, the property becomes part of our RTO program.
8. Move-In Day: It's time to celebrate! We'll walk you through the property, hand over the keys, and discuss our quarterly check-ins.
9. Option Period: Make regular payments, improve or maintain your credit, hold contents insurance to ensure smooth sailing towards homeownership.”
The Big Purchase
10. Confirm Your Intent: Six months before your option period ends, confirm your intent to purchase the property.
11. Finalize Your Purchase: Secure your mortgage approval and finalize the purchase. Congratulations, you now own your home!
Key Point of The Rent-To-Own Program
Rent-To-Own Structure - The Rent-To-Own program is a Lease Option program consisting of two main components; the Rental or Lease Agreement and the Option To Purchase Agreement. The Rental or Lease Agreement is the agreement that sets out the terms of the rental relationship you have with us for the duration of the program. As with any rental situation, you are required to make regular rental payments to continue living in the home. At the end of the program you will have the option to purchase the home for a predetermined price.
Tenant Buyer first - You are first a tenant (Tenant Buyer) who pays rent for the duration of the Rent-To-Own program. Unlike a standard rental situation, where the landlord maintains control of the property, you live in the home now with more control of the care and upkeep of the home, all with the support of the Borealis Property Group team should anything unexpected arise.
Purchase Price – At the start of the Rent-To-Own program my team and I work with you to identify what you can afford when you have the option to purchase at the end of the program, typically in 2-4 years. We assess the price of the home to be purchased today, using historical appreciation rates to calculate backwards from the price we determined you can afford at the end of the program. Unlike rental payments, which can increase from year to year, you know exactly what you are paying and you may even benefit if appreciation rates increase beyond the historical average used to calculate the purchase price. Once we've determined the purchase price you can start shopping for your home with one of our real estate specialists!
Initial Option Consideration - One of the main requirements to purchase a home is a 5%-20%, or higher, down payment. It can be challenging to save for this down payment, especially if home prices continue increasing; you're saving for today's price and the price will have changed by the time you reach your down payment savings goal. Instead of struggling to save for a down payment before you purchase a home, in a Rent-To-Own program you pay an Initial Option Consideration (IOC) which is later applied to the down payment when you take the option to purchase the home. The Initial Option Consideration is a percentage of the home’s purchase price and the amount paid is negotiable (typically 3-5%).
Monthly Option Consideration – In addition to paying the Initial Option Consideration, you will pay a Monthly Option Consideration (MOC). The MOC is calculated by subtracting the Initial Option Consideration paid up front, from the down payment you will require to purchase the home, and then divide the remaining amount required for the full down payment, by the number of months in your Rent-To-Own program. This amount is then added to your monthly payments. The MOC payments mean you will pay more money each month (as rent + MOC) but you have the peace of mind knowing you are on track to save the correct amount of money for the down payment when you choose the option to purchase home.
Maintenance – If you are a new homeowner or you are moving into a larger home, i.e. from a condo to a single family home, a Rent-To-Own program can be an ideal learning situation. Typically, you will also be responsible for paying for maintenance, repair, etc. Though you’ll have these additional responsibilities, my team will be here to support you through the process of learning the ropes of home ownership.
Closing – If you have maintained all of your payments and fulfilled the steps required for mortgage approval then, at the end of the program, you will have the option to purchase the home for the predetermined price. Most importantly, you must qualify for the mortgage to successfully purchase and close on the property; your monthly option consideration payments must be paid in full, you must have maintained or improved your credit throughout the program and you must show the lender that you have reported regular income. If you meet all these requirements and are approved for the mortgage by the lender it’s time to celebrate. On the closing date set by the lender the home will officially be yours!
A well-planned Rent-To-Own program can be a win-win situation for everyone, whether you’re a home buyer, seller or an investor. Send a message or complete the Tenant Buyer Questionnaire today for more information on how to get started on your path to home ownership!
Complete the Rent-To-Own Questionnaire at the link below to help us assess whether a Rent-To-Own program would be good for you.