While each Rent-to-Own company is a little different here is the basics. The concept is designed to help people who are almost ready to buy and most likely would in the next few years. The program is designed to help people who either:
A) have a small down payment (2.5% when you need 5%+) and good credit or;
B) have a down payment but bad credit they need to fix to qualify for a mortgage.
First the rent-to-own company will meet with you, and if you qualify for their program they will pair you with an Investor who will give you a commitment. Then you and your REALTOR (c) can go shopping for a home, if you don’t have a REALTOR (c) they will suggest a couple.
You get to shop for, and choose the home that YOU want, it doesn’t have to be the one you saw on-line. Though they usually have a few restrictions such as, No Rural, No Well/Septic, No Vacant Land. Once you have chosen a house your matched investor will step in and work with the REALTOR (c) to purchase the home.
You will sign a Lease and an Option to Purchase with the investor where you will set out how long you will rent to own and what you will purchase the home for at the end. This purchase price is an estimate of what the home will be worth at the time, but will also include a minimum that the investor will accept, so if the house is worth more than that at the time of purchase YOU WIN, and if it is worth less that the minimum agreed upon you can enter into a new agreement with the investor.
While you are renting the property you will pay more that standard rents, but the extra will be applied towards your down payment at the time of purchasing the house and as a financial incentive to the investor.
IT IS STRONGLY ENCOURAGE THAT IF YOU ENTER INTO THIS SORT OF AGREEMENT YOU HAVE A LAWYER PLACE A CLAIM ON THE TITLE OF THE HOME YOU ARE RENTING TO OWN.
During your Lease you will be expected to maintain the home as if it were your own, that will include maintenance, costs of repairs, ect. It’s really as if you owned the home. Keep in mind if during the lease you walk, you loose your down payment, so this is not an agreement to enter into lightly.
Got questions of your own, ask us at http://www.OttawaRealEstateQuestions.ca
Not intended to solicit business from anyone under contract with a REALTOR ®
©Dave Williams -2012-