I’m In A Rent To Own : How Do I Keep It?

Renting to own a home can seem like a good solution for a family who cannot qualify to purchase. There are many reasons why one may not qualify to purchase. It could be related to insufficient income, insufficient work history, insufficient credit, insufficient savings/down payment, or any combination of those!

When you rent to own a home:

1. You agree on a future purchase price of the home.
2. The landlord/owner charges a premium on the rent that will accumulate in a down payment fund over time.
3. When the agreed date is reached in #1, you must purchase the home as agreed or risk losing the down payment fund in #2.

How do you avoid losing the down payment that you have accumulated?

By paying the seller the agreed purchase price with some combination of the down payment/other saving and getting a mortgage for the difference.

This means qualifying for a mortgage with sufficient credit and income.

Risky Business

When renting to own, both parties are taking some risk:

The landlord/owner is taking a risk because the future value of the home may be higher than the agreed purchase price. Meaning that they are selling something at a discount. Why would the owner take this risk? If the renter cannot qualify for that mortgage in the future, the owner is not only able to sell that home for more than expected, but the owner also gets to keep the funds. Win-win! For the owner!!!

The renter is taking a risk because they may lose their deposit. BUT if the renter can qualify for the mortgage, then they win because they stand to pay less for the home than it’s worth.

That’s where we come in.

We have a history of helping renters close on the purchase. How? We are able to get creative and use the built up equity in the home to reduce the bank’s risk, and help qualify for a mortgage. We have even helped rent to owners close on the purchase and turn around and sell the home at current market price to make a profit!

Have A Plan

The key is to have a plan and an exit strategy. You are likely renting to own because you can’t qualify for a mortgage today. What makes you think you will qualify in 5 years if you don’t qualify today? Whatever is preventing you from qualifying today needs to be identified and fixed over the next 5 years. We will identify those factors and coach you to succeed!