How Does Rent To Own Work?
This is an extremely important question as many people understand the basics, but they may not understand how does rent to own work or how it can benefit them.
The short answer describing Rent to Own, or RTO as it’s often referred to, is that an individual has an agreement to rent a certain property for a stated length of time and then they will purchase it at the end of that time frame.
The slightly more involved answer is that by using RTO, a person can speed up their ability to get their own home. They do this by finding a home that suits them, even if they can’t currently qualify traditionally for a mortgage. They are then able to move in within weeks or months rather than continuing to rent for years as they save up a downpayment.
But How Much More Will It Cost?
How much more will it cost going through this Rent To Own program versus buying a house traditionally?
Actually it doesn’t cost more, because we fix the price you will be buying at when it comes time to purchase right now. This will be a fair price that we both agree on in advance, but you’ll get the benefit of living while you’re preparing to buy.
With our RTO program our goal is to put you into a position that when the end of that rental term comes to it’s end you’ll be able to qualify traditionally. We do this through by doing three key steps.
First, you do initially have to put down more than you would if you’re renting, but far less than you would need to require to get financing through a bank on a property right now.
This number varies depending on the property, but it typically starts at $10,000 and the more upfront money there is, often the easier it is to make the financing work at the time of purchase.
This would be known as the Option Consideration
Second, we work out in advance all the numbers needed put you in position to buy the home at the end of the rental term.
We already know the purchase price, so depending on your individual situation we can structure it so you will qualify with 5% down, 10% down or even 20% or more if you wish to avoid CMHC fees.
We do this with our Tenant Saving Plan where each month in addition to the agree upon rent, you’ll pay an additional Monthly Option Consideration payments that contribute to your initial option consideration to create your downpayment.
Third, we’ll get you working with our approved list of mortgage brokers right from the start. In fact we can’t even move forward until we get their approval!!
The need to talk with them is to confirm we can create a plan that will work.
Unlike other Rent to Own companies who just “take the money” and leave potential buyers to fend for themselves we want to set you up to succeed. Home ownership isn’t a privilege or a right, but it would be our privilege to do this right for you.
How Do We Find Out More?
Well your next step in order to find out more details is to talk to us. We can spend a few minutes on the phone just to go over some basic details and from there we can arrange for an in person meeting where we can start getting more information to make this work for you.
You can find that information on our Contact Us page
Alternatively you can fill out our Rent To Own inquiry form which helps expedite the process as it gives us some basic information to start with before we initially talk.
So click one of the above links to get to the next stage and get one step closer to owning your own home!