Rent-to-own housing is a concept that creates an opportunity for many people to buy new homes. Most people who have cash-flow problems, credit issues, or who are new to Canada cannot afford to buy a home because of down payments and other constraints. Rent-to-own makes buying a dream home a reality. Here are a few things you should know about rent-to-own housing.
Beneficial for People Who are New to Canada
Rent-to-own benefits people who have migrated to Canada. Immigrants often cannot afford to qualify for a mortgage immediately. This process allows even immigrants to become home owners sooner than later. Rent-to-own is especially beneficial for immigrants.
No Upfront Premium or Deposit Required
When purchasing a home, the tenant has the option of paying an upfront premium to purchase a home. At the end of the expiration date, the tenant can purchase the home at a predetermined price. This option deposit can be negotiated between the tenant and the investor.
The options deposit and rent credits will be used for down payment and mortgage payments on the home. If the tenant does not buy, the rent deposits and option deposit are non-refundable. This deposit amount is typically between 1 and 2 percent of the total property value.
Tenants Can Test the Home before Buying It
Prior to purchasing a home, tenants have the option to try the home and the neighborhood to determine if it is right for them. The tenants can refuse to purchase the home if they feel apprehensive about the neighborhood, the neighbors, or the home itself.
Tenants Can Build Their Credit over Time
Even people with average credit can now become home owners. They simply are required to rebuild their credit by paying on time. The down payment will be built up through rent credits.
Investors Can Collect the Option Deposit before a Transaction Occurs
The option deposit is collected before a transaction occurs. The amount may vary based upon the home owner. Each home owner will have different set of rules. As long as an acceptable form of payment is provided, the deposit will be rendered valid. This is beneficial to people who have decided to participate in the rent-to-own program.
Many renters are required to provide first and last month’s rent. This amount is equivalent to a deposit initially and more will be paid through the monthly mortgage. Always check with the home owner to verify the established rules.
Investors are No Longer Responsible for Repairs
In rental situations, investors are responsible for repairs. This type of program removes this responsibility of repairs. This savings provides tenants with the full responsibility of home ownership to determine if they can handle it. If not, tenants are well within their rights to say that they are no longer interested in purchasing the home.
Investors Will Also Receive a Guaranteed Sale Price if the Tenant Exercises Their Option
The guaranteed sale price saves investors the effort of entering a price war. This can be time-consuming and highly frustrating depending upon the circumstance. With rent-to-own, investors will be aware of the sale price. This price will be guaranteed and will be free of negotiations at the end of the contract. Many home sellers depend on this when the property values are falling, and the credit restrictions are tightening. This also allows buyers to purchase homes at prices that they can afford.
Rent-to-Own you’re Next Home
Consider rent-to-own and make home ownership a reality. The process is simple, and the benefits are long lasting. Rent-to-home is the latest trend that is intriguing to Canadians and immigrants. Find rent-to-own opportunities in local advertisements or through realtors. The process is worth the effort.