Is There a Catch to Rent-to-Own Homes
November 7, 2023
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One of the accomplishments that many Canadians associate with responsible adulthood is purchasing a home for the first time, which is why rent to own programs in the Peel Region have helped so many people who have felt trapped renting and have no way to stop the cycle.
HOS Financial has helped many people enter rent to own programs in the Peel Region, and one thing that separates us from the competition is our commitment to our clients. We know that sometimes financial hardships crop up, so we work with each of our customers so that if a financial hiccup hits their budget, they have help avoiding Power of Sale or foreclosure.
HOS Financial’s Rent to own program helps families buy New Homes and also to stay in the home they already own when their financial position has changed drastically.
When you’re talking about buying a house, most people think about taking out a mortgage and paying the bank back over time. There are some people who can afford house payments but don’t have the credit or the income history to qualify for a mortgage, so a rent to own program gets them on the path to home ownership before they have to get a bank mortgage approval.
What exactly IS “rent to own”?
Renting a house to own works a lot like signing a lease on an apartment or a home. You put down a deposit, you move in, and you start paying rent. In the case of Rent to Own, a defined percentage of rent goes into a savings account for you. Over the course of the rent to own program, each monthly payment adds to that fund known as Option Credits.
When the rent to own program comes to an end, you have a down payment total equal to the original deposit plus accumulated monthly Option Credits.
Using Rent to Own programs Peel region helps you save for a down payment – which is often hard for many people in their budgets. Let’s say you’ve found the home you want, but you cannot qualify for the required Mortgage.
A rent to own program allows you to move into that house, start saving a down payment and fix your credit so that at the end of the term usually three to five years your credit is in good repair once again, and you can qualify for a bank Mortgage.
What are the requirements for a rent to own agreement Peel region?
A rent to own agreement is made up of two separate documents. One is the lease that you sign while you are still paying rent, and it will look similar to a standard lease. The other document is the Option to Purchase agreement.
This Option to Purchase gives you the right to purchase the property at a pre-determined price at some point between the time when you sign the documents and the end of the lease. Your documents will also indicate how much of your rent is going toward your future down payment each month, so you know how much you are saving.
Before you sign the paperwork for your rent to own program, it’s important to have independent legal advice from your lawyer. Your lawyer will look over your rent to own agreements and make sure they guarantees and protects your rights. This costs you only a few hundred dollars but is worth the protection from the risk of signing a flawed agreement.
Rent to own and Lease to own
You might see both of these terms used when you are looking for a rent to own home in the Peel Region. However, these are basically interchangeable. In either case, you are using the time between moving in and the end of the lease term to save a down payment and repair your credit so, when the rent to own program comes to an end, you will be able to go to a bank or other lender and be able to gain approval for a Mortgage.
Why do I have to sign an Option to purchase agreement?
This is actually the most exciting part of rent to own programs in Peel Region. You have a signed agreement giving you the chance to buy a house – perhaps for the first time in your life. You still have a long way to go as far as building your credit and saving a down payment, but you are at least on the path.
What does it all mean?
The chance to sign a rent to own agreement in the Peel Region is likely to be your best shot at starting down the path to owning your first home, if you have credit or income history issues. Let HOS Financial help you find a home of your dreams.