Is your home on the line? Rent to own can help

Rent to own has helped many families who have either had a hard time saving a down payment or who have had their credit take a blow as a result of rough times. Traditionally, a rent to own tenant would pick their home and it would be purchased for them. One thing that many don’t know is that we also buy homes that are on the verge of being foreclosed on.

Rent to own is a good option and can help keep you stay in your home. We assist by taking ownership of the home until you have established yourself and can purchase the home back. If you are experiencing a situation like this, reach out to us and let us get you back on track.

The Pro’s and Con’s of Rent-to-Own

As the Canadian real estate market changes, housing prices have increased substantially. New mortgage rules are being implemented and the increase of poor credit among young adults and lack of down payment is becoming increasingly difficult for them to become first time home buyers. You may have the income but not the best credit or great income but no down payment saved. As the real estate market changes, for good or bad, renting to own can provide a win-win situation for tenants who aren’t ready to be homeowners, just yet but also don’t want to have their rent not benefit them in the long run.

Here is how it generally works

STEP 1:

You will receive a pre-approval from our in house mortgage financing team

STEP 2:

You will meet one of our realtors who will help you find a home you love

STEP 3:

Once a home is found, one of our investors will purchase it for you and act as your landlord

Here are some advantages of renting to own:

  • You don’t current have the funds needed for a down payment but will at the end of your rent to own lease agreement because of the additional payments you will be making.
  • You don’t have good credit; but you can live in your own home with receiving credit repair check-ups from our in house financing team
  • If the market price of the house in the future is higher than the agreed upon future set price, you still get to purchase it for the agreed upon set price.

Here are some disadvantages of renting to own:

  • If you do not go ahead with the purchase, then you forfeit the extra credits you have.

Rent to own is a great option for both landlords and tenants as it provides flexibility, stability and a guaranteed benefit to both parties. Contact us for more details.

What To Look For In A Rent to Own Company

One of the biggest issues in the Rent to own industry is the fact that it has no professional governing body, making it open to anyone who claim to be a rent to own expert. So how on Earth do you know what’s real and how do you know where to begin? The purpose of this blog post is to prepare anyone considering Rent to own with key questions that they should be asking BEFORE they consider entering a rent to own program.

These days, there are various rent to own companies – but who are they really? The first step in evaluating a Rent to Own Company is to look at the company and the people involved. Find out who owns the company and look for testimonials from happy clients. Here are a few things to other things consider:

How long have they been involved in Rent to Own?

Real estate investing of any kind requires expertise, knowledge and a great deal of experience.

Have they written anything about Rent to Own via a blog or other articles?

One way to evaluate the knowledge of a professional is to see what they’ve written on the subject. They must have some blogs, reviews or testimonials or their website and perhaps have written for other forums.

Though rent to own is a very realistic and beneficial path into homeownership, it’s important to ask questions and do your research before jumping in. These questions are at the core of what you should know before making the decision to enter into rent to own.

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Who buys the property for me?

Who buys the property that I want to “Rent to Own?”

Rent To Own has a parent company, Smart Home Choice, which will partner you with your investor/landlord. After having been pre-approved with our in-house mortgage expert and finding a property with one of our realtors, one of our investors buys the property for you and will act as your “landlord” while you reside in your home, collecting your rent on a monthly basis.

We do half your work for you, saving you time and money!

We also walk you through the steps of completing documents and doing a credit fix and repair, which as we all know can be a process but we have simplified everything for you.

Getting a mortgage at the end of the rent to own term

Purchasing a home is one of the largest purchases you’ll make in your lifetime, in Ontario’s case, the sky is the limit with the current price of homes. Getting a mortgage can be tricky, especially if you’re a first-time home buyer. There are conditions to be met, fees and plus the headache of the impending move. Let’s fast forward; You found your dream home and for certain reasons such as not having enough funds for down payment or because your credit score was too low, you decided to embark on the Rent to Own path. Through Rent to Own, you could become a homeowner within a reasonable time frame and secure a home at a fixed purchase price to purchase 3 years from today. What this means is you’ve beat the market by securing a home at a great fixed price as opposed to the actual value 3 years from now; despite your lack of down payment or your low credit score

At Rent to Own Today, the moment you sign the rent to own agreement, we get you in touch with a Mortgage Broker that will work with you to re-store your credit and help you get the best mortgage to suit your needs. Depending upon your situation, the Mortgage broker will meet with you every 6 months or on an annual basis and reassess your situation. This added bonus is optional.

If a low credit score or a lack of credit history were the reason behind your decision to Rent to Own, our Mortgage broker will work with you to help you increase both aspects of your credit. By the time your Rent to Own lease is finished and you are ready to purchase your home, your credit report will be new and improved, helping you put your best foot forward when applying for a mortgage.

Choosing the right type of Mortgage loan is one of the most important decisions you’ll make in the home buying process, which is why it’s great to have a trusted Mortgage Professional, who is a Rent To Own expert guiding you through the process from start to finish. With a Mortgage expert by your side, you’re already halfway there!

There are a lot of factors involved in a mortgage that is important for our Mortgage Broker to know in order to find a product that is tailored just for you; your priority in a mortgage may be low payments, the term, the interest rate: fixed vs. variable, the amortization and so on. It’s very important to convey this to your Mortgage Broker prior to the end of your lease to explore financial solutions which will benefit you.

With that said, Congratulations! If you are currently in our Rent to Own Program and applying for a mortgage, your lease has just ended and you are one step closer to becoming a homeowner.

Rent to Own vs. Plain old Renting

Rent to own is a leasing agreement where a tenant makes monthly payments to the landlord over a period of time, usually 3 to 5 years with the goal of purchasing the home at the end of the lease. The rent to own agreement has 3 sections;

  • option fee, which is your deposit
  • base rent
  • rent premium, which goes towards their down payment

Now the question that everyone asks, “why rent to own, when you can rent?” The question should be “Why rent, when you can rent to own!”

Why rent to own instead of just rent? The answer is equity. When you simply rent a home the traditional way, you do pay the initial deposit, monthly rent and extra for utilities.

But you receive nothing in return, 0% ownership and 0% equity and a place you can call home for a short period, which is determined by the landlord.

On the other hand, in a rent to own agreement you pay monthly base rent, a monthly rent premium and an option fee that you can use towards the cost of your down payment. Therefore, it’s not money wasted, it’s money that you will get a return on by receiving ownership of the home, the increase in the equity is yours and you have a place you can call home, until you decide to move.

Renting to own brings you one step closer to becoming a homeowner, it gives you time to save for the initial down payment on your home or improve your credit. Down payments are large amounts of money, paid lump sums and can be worth 20% of the purchase price or more. Therefore, renting to own helps you kickstart your savings for your down payment.

There are several reasons why people choose rent to own vs renting. A few reasons and usually for majority of the cases, it is due to poor credit, insufficient savings and low income. With poor credit, regardless of your income, you won’t be able to buy a house with a decent interest rate right off the bat.

The rent to own process takes about 3 to 5 years, in this time the buyer is able to build equity in the home while also building their credit, saving for that huge down payment and work out personal day to day finances and running’s of a house.  

In the long run, if home ownership is your goal but your credit and finances are holding you back, then rent to own is the option for you. If you are able to accumulate enough capital by the end of the leasing term to put down towards your down payment and become eligible for a mortgage, then you have the choice to purchase the home of your dreams.

With Rent to Own Today, we get you in touch with a broker, who works with you to meet your credit and down payment requirements and gets you closer to achieving the homeowner dream.

Why do families decide to use rent to own?

Why do families decide to take the rent to own route, instead of the traditional route of walking into a bank and getting a mortgage? What are these families thinking and what are their future goals?

Here are a few reasons. Families who decide to take the rent to own route, are the ones that are perhaps currently renting but want to become homeowners, They may not have the 5% or 10% needed for down payment. They may want to first live in a neighbourhood before deciding if its right for them. Many aspects come into play. Maybe they are new to the country and do not have established credit or perhaps they have bad credit. There are many factors involved and all are great reasons to jump on board. Why rent, when you can own.

It could be as simple as, the family feels more at home knowing they will eventually own the home instead of renting. There are financial reasons, emotional reasons and circumstantial reasons. The decision to rent, rent to own or to get a traditional mortgage all vary from one family to another.

  • Poor or limited credit history
  • Insufficient length of employment
  • Purchase price is a guaranteed at the beginning of the lease term, even if prices go up, you’re still locked in.
  • Insufficient down payment
  • Benefit today by living in the home of your choice, instead of renting elsewhere.

So, you see, there are many reasons why a family would choose to take the rent to own route, instead of simply paying rent, which does not provide any returns. Renting to own gives them the ability to purchase their dream home sooner, even when times are troubled. It gives them the peace of mind and emotional attachment we all want from a home. A home should feel like it is yours, not rented. You should be able to make it your own, regardless of financial circumstances. A home provides stability to families, they can stay in one location for generations and never move. Families who rent must face the harsh reality of moving and we all know how difficult and challenging moving can be.

Families want to provide each other with peace, stability, freedom and safety. A home is the best way is to provide all that and much more. A home they can call their own, a home they can grow old and make memories in. You can’t put a price on that.

How Rent to Own Can Help Families in Troubled Times

We all go through times especially with the economy these days, the high prices of homes and the job market. We may not be going through The Great Depression, but times are tough on everyone. If you are the average family, like many of us, it is difficult to save the 5% down payment for first time home buyers. Maybe you’re suffering from bad credit? Getting a mortgage approved could be a challenge or perhaps you’re self employed. There may be many reasons why you are unable to go through the traditional route to get a mortgage approved. However, you don’t need to sweat it!

We are firm believers that you should make your hard-earned money work for you. Why waste your money on a property by paying rent, when you can pay rent to a property that you can eventually own? Even in tough times, there are ways to help you achieve your goals.

To start off, renting to own is an agreement whereby an investor or a property owner rents out a house to a tenant and gives them the option to purchase the property at a certain period at a predetermined price.

This option is very attractive for families who are on a budget but don’t want to waste their money simply renting. We’ve got three benefits:

  1. You get to choose the home and the neighborhood you want to live in.
  2. If you have poor credit history, you can improve your credit rating over the term and thereafter use rent credits to build your own down payment
  3. There is no obligation, only an option to purchase the home.

These are some great benefits for rent to own, it gives you the ability to make your own money work for you.

Get in touch with us for more information on how we can make your dream of owning your home come true sooner. If you think you’re ready APPLY NOW!

How Rent To Own Can Benefit New Canadians

Rent-to-own is a great option for many New Canadians as it is difficult to qualify for a mortgage through a regular banking application, due to lack of income or a low credit score. Renting to own gives New Canadians the ability to own a home and giving them security and a chance to make a home for themselves. Rent to own is a great option for students and recent graduates entering the work force as well. Rent to own is like an investment which doesn’t pay in dividends but it provides you the means to own a home without paying the 20% needed for down payments.

Let’s talk about the Real estate market, our ever rising real estate market; which is great if you already own your home, but if your looking to buy a home then the rising cost of houses can be scary! If you currently don’t have the means to put a down payment on a home right now and the rising cost of homes does scare you, but you also want your rent payments to actually go towards an investment then renting to own is an excellent option for you.  Let’s talk about the good stuff, the benefits!

  • Equity: One of the biggest benefits is the rate at which you accumulate equity, without even actually owning the home. This is especially true in our Canadian market, where the prices of homes have been on a sharp rise.
  • Security: A home is a place where everyone feels the most safe and secure. Homeowners enjoy more freedom to do as they please with their property as compared to living as a renter, this is primarily because homeowners are not subjected to inspections by the landlords. Homeowners also have the freedom to paint, alter and add improvements to the home without getting consent from a landlord.
  • Stability: Being able to settle into a home for years and year to come is a calming, peaceful and great feeling as compared to the stress of being evicted by your landlord, finding a new place and adjusting to it. If you have children then your adding the stress of moving, changing schools and neighborhoods, making friends and much more to that.
  • Option deposit is credited to the price of the home: The buyer/renter pays the seller an option deposit. This money is vested interest in the home and will be fully credited when you buy the home.
  • Minimum expenditures out of pocket: When you purchase a home, not only do you need a down payment of at least 20% of the purchase price to qualify for CMHC Insurance, you also need money for closing costs. Whereas in a rent to own contract, you’ll only pay a normal rental security deposit plus an option deposit.
  • Control of the Home: The buyer has full control of the home while paying rent, this is a great way to learn the ins and outs of the home ownership.
  • No Taxes, Less Liability: Since the buyer does not yet own the home, they do not have to pay property taxes on it, this also saves you money in costs and gives you ample time to learn and adjust to the total cost of owning a home before you take full responsibility.
  • Minimal Maintenance: Major maintenance problems that exceed a certain amount, already discussed with the owner are delegated to the seller.

Renting to own can be an easy, low-stress, inexpensive way to buy, sell or invest in real estate.

It’s Time To Pull Out Your Maintenance Checklist

Maintenance Calendar

Its spring time!!  Most home maintenance activities are seasonal.  It’s a good idea to inspect your home regularly, and replace or repair parts and materials that have worn out.  REMEMBER components of your house work together and affect each other.

So, minor repairs can quickly become major ones if you don’t take care of them right away.  You might be able to do many repairs yourself.  However, if you feel you can’t handle the job on your own, it’s best to call an expert.

Keep in mind bad materials and poor workmanship will end up costing you more in the long run. Keep careful records of all repairs and improvements you make.

Below are suggested maintenance task for spring and summer. Review them to see what needs to be done for your home.

Good Luck & Have Fun!!



Spring

☐  Have fireplace or wood stove and chimney cleaned and serviced as needed.

☐  Shut down, drain and clean furnace humidifier, and close furnace humidifier damper on units with central air conditioning.

☐  Switch on power to air conditioning and check system.  Have it serviced every two to three years.

☐  Check dehumidifier and drain – clean if necessary.

☐  Its recommended water be tested for quality every six months.

☐  Check smoke, carbon monoxide, security alarms and replace batteries.

☐  Clean windows, screens and hardware.  Check screens first and repair or replace if needed.

☐  Open valve to outside hose connection after all danger of frost has passed.

☐  Examine foundation walls for cracks, leaks or sign of moisture and repair as required.

☐  Ensure sump pump is operating properly before spring thaw set in.  Ensure discharge pipe is connected and allow water to drain away from foundation.

☐  Re-level any exterior steps or decks that moved as a result of frost or settling.

☐  Check for and seal off any holes in exterior cladding that could be an entry point for small pests, such as bats and squirrels.

☐  Check eaves troughs and downspouts for loose joints and secure attachment to your home, clear any obstructions, and ensure water flows away from your foundation.


Summer

☐  Monitor basement humidity and avoid relative humidity levels above 60%.  Use a dehumidifier to maintain relative humidity below 60%.

☐  Clean and replace air conditioning filter and clean or replace ventilation system filters if necessary.

☐  Check the basement floor drain to ensure the trap contains water; refill with water if necessary.

☐  If you have a plumbing fixture that is not used frequently, run some water briefly to keep water in trap. (For example a laundry tub or spare bathroom sink, tub or shower stall)

☐  Disconnect duct connected to your clothes dryer, and vacuum lint from duct, the areas surrounding your dryer and your dryers vent hood outside.

☐  Check smooth functioning of all windows and lubricate as required.

☐  Lubricate garage door hardware, automatic garage opener motor, chain and other moving parts and ensure that the auto-reverse mechanism is properly adjusted and operating properly.

☐  Check exterior wood siding and trim for signs of deterioration; clean, replace or refinish as needed.

☐ Remove any plants that contact and root that penetrate the siding or brick.

☐  From the ground check the general condition of the roof and note any sagging that could indicate structural problems requiring further investigation from inside the attic.  Note the condition of shingles for possible repair or replacement and examine roof flashings, such as chimney and roof joints for any signs of cracking or leakage.

☐  Check the chimney cap and the caulking between the cap and chimney.

☐  Repair driveway and walkways as needed.


Have a wonderful, safe & fun spring & summer months!

Sincerely,

Selena

 

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