How Does Rent To Own Work for Buyers?
Tenant buyer is the terminology used to describe the people in our rent to own program who can’t necessarily qualify right now, but want to get started with home ownership sooner rather than later. A tenant buyer is the “BUYER” of the Rent to Own property.
For tenant buyers the process is fairly simple, although there are a few qualifying hurdles we need to address up front. We’ll get into those shortly, but let’s start with an overview.
Tenant Buyer Rent To Own Overview
There are a large number of individuals who want to own a home but due to time and circumstances are unable to currently.
Rent to own solves that for many of these individuals by creating an environment where tenants can rent a home with the goal of buying that home within the next one to four years.
This involves three steps for the tenant buyer and note these steps aren’t in order of importance as they all are important! Rent to Own can be a challenging process. But it has been THE perfect fit for all of our buyers!
Step one is a Down Payment
Down Payment is the initial deposit that we require from a tenant once we’ve found the right property for them.
This is the initial building block for the down payment you’ll require at the time of purchase. While the actual amount can vary the closer it is to the eventual down payment the easier the process. Most Rent to Owns have a down payment required.
Step Two is the Monthly Payment (rent and SAVINGS)
The goal with our Rent to Own program is to put you in a position to be able to qualify at the bank for a mortgage at the end of the rental term and that you’ll have a sufficient down payment saved up to satisfy the lender providing the mortgage.
Your monthly rent is the same as if you were renting all along. Only now you are paying rent for a home YOU WILL OWN someday soon.
In addition, we will charge you an ADDITIONAL monthly payment toward the purchase of the property. For some it is called “the Option Consideration”. For others it is called “the Purchase Credit”. Either way, your Down Payment and Additional monthly payments go TOWARD the purchase of your home.
If you decide to work with us, YOU save your down payment up front and over time.
In most cases, tenant buyers pay an additional $300 to $500 per month.
The easiest way to think of it is your own forced savings plan that allows you to buy your home.
In the meantime, you are living in the house you will buy TODAY rather than waiting or worrying that prices will skyrocket or feeling stressed that your landlord might sell your home, etc.
Step Three is our Buyer Preparation Program.
This is where we work with our team of qualified mortgage brokers who understand not just our systems, but the mortgage requirements that you’ll need to fit into in order to buy your home!
We’ll have them review your credit status, we’ll work through the numbers with them and you’ll get to talk to them to make sure we all understand our requirements going forward.
By preparing you to buy on time and with adequate down payments we can help you avoid unpleasant surprises such as too low of a credit rating to qualify for the best rates or adding ill advised debt that may be lowering your purchasing capabilities.
Think of it as the training any potential homeowner should have before purchasing!
How Does Rent To Own Work? – Bringing It All Together
Now we’ve shared many of the pieces but here’s where we bring it all together to show you how this works. So here’s a quick example.
You found the perfect perfect property for you to rent to own. You’ve managed to save up $15,000 for a down payment.
We’ve determined through our Buyer Preparation Program you will need $25,000 as a down payment when it comes time to purchase and we have three years (36 months) to get that set aside.
By saving about $300 per month of that paymentt, over 36 months you’ll have added another $10,800 to your initial $15,000 giving you a $25,800 down payment toward the purchase of the property.
Due to our diligence during the three year term and via meetings with our mortgage team several months before it’s time to buy we’ll get all the paperwork in place to help line up your first day of complete home ownership!!
Voila! you’ve completed the Rent to Own Process and the property you’ve called home for the last few years has become yours by following an excellent plan.
Can you see how this can work for you? Hopefully we’ve answered any questions you may have about how does rent to own work, but if you still have questions, or if you want to know the next step, keep reading.
What’s My Next Step?
At this point you have a few options.
You say this isn’t for me and continue renting, continue possibly getting priced out of the market and think back in a few years about what could have been.
Or you could fill out our contact form below, get in touch with us and we see how we can help you move forward.
Or maybe we still haven’t answered all your questions about how does rent to own work and you need more information. Again, simply fill out the inquiry form below and we can contact you directly and answer any questions you may have about the rent to own process, any of the qualification steps and everything else along the way.
Worst case if you fill out the form and find out it won’t work for you it’s still far better than spending the next several years wishing you’d only taken this first step, but it’s up to you 8′]
Here’s the contact form, the more info you provide, the easier it is for us to move forward.