• Pros and cons of rent to owns in Hamilton

    What is a rent to own?

    Essentially when you’re living in a rent to own home a portion of your rent is being directed into a kind of down payment fund in anticipation of purchasing the home at some point in the future. When you sign a rent to own contract, you agree on a future purchase price. So you may agree with your landlord that you’re purchased a home in five years from now for a set price and you will use your down payment that you have accumulated during that period towards the purchase price.

    Why would somebody rent to own instead of purchasing the home in the beginning?

    The short answer is: they can’t qualify for a mortgage. For whatever reason, credit, lack of a down payment, or lack of income, they cannot afford are qualify to purchase the home. But they dream of one day becoming a home owner and believe that one day, they will be in a position to purchase and they will qualify.

    Why would the landlord want to enter into such an agreement?

    It makes you wonder why a landlord would want to enter into such an agreement and agree on a purchase price today of a home that will not be purchased until years from now? The short answer to this question is: the landlord anticipates that the renter’s situation will not change and they will not qualify in the end. This means that the landlord would keep the savings that had accumulated and the renter would forfeit this additional money.

    In other words, the landlord is gambling that the renter will fail and lose their down payment. Whereas the renter is gambling that they will be able to qualify for a home that is much more valuable than the price they had agreed on previously.

    The good news is that we are on the side of the renter who wants to purchase the home and we have successfully aided many clients in obtaining mortgages to do so, much to the consternation of the landlord or owner.

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