Monthly Archives: February 2016

How To Find Rent to Own Homes in Ontario?

Owning a home is a dream for most people, but it often requires some sort of lump sum down payment of 20% or more up front, as well as being able to get approved for a mortgage by having stellar credit. This is often the reason why people rent, since no down payment or mortgage approval is required if they are unable to gain access to either of these. The problem some people have is that they do not have good credit, which is a detriment when applying for a mortgage. Often lenders will not loan money for a mortgage to those who have a bad credit history. This is where rent to own homes contracts come into play, in order to help these individuals realize their dreams of finally owning their own home, as long as they meet the less stringent requirements.

How Do Rent to Own Home Contracts Work?

Rent to own home contracts are essentially rental contracts with the option to buy the home at a predetermined price after the rent-to-own period ends. Part of the monthly rental payment goes towards the equity in the home, and, if you make your payments consistently on time, they also towards building good credit. The rent to own home buyer is given the option to purchase the home at a pre-determined price, regardless of whether the value of the home fluctuates with the real estate market. Thus, if the value of the home goes up by the end of the period, the rent to own home buyer is still only obligated to pay the lower pre-determined price.

There are certain responsibilities that the rent to own home buyer must adhere to during the rent to own period in order to maintain the possibility of owning the property at the end of the period, and in order to establish good credit. First of all, it is very important that the home buyer pays their rent on time every month. Late payments do not favor well with these rent to own homes contracts. They should also treat the home as a rental property, in that permission from the owner should be granted prior to making any alterations to the home, although improvements are generally permitted and the leaser will benefit when they buy the home if the improvements have increased the value. In addition, the home should be treated with care, and any minor repairs should be repaired by the renter accordingly.

Advantages of a Rent to Own Contract

Individuals who have poor credit, or are bankrupt, or are self-employed often have trouble getting approved for a mortgage. Lenders will be hesitant to lend money to these individuals, as there is no assurance that payments will be able to be made in full or on time, or even at all. Even though these individuals may be fully capable of making mortgage payments, a poor credit history often makes it difficult to get a mortgage.

Most rent to own home contracts makes it possible for these people to finally own a home. These contracts help renters to own a home by building equity in the home during the rent to own period. This in turn helps to build up good credit again, and fix any financial problems and reputations that a person with a bad credit history may have.

Although monthly rental amounts can be a bit higher in a rent to own home situation as opposed to a basic lease, a portion of the monthly payment is applied towards the actual purchase of the home, which acts as a forced savings system that helps the renter to build a larger down payment when the rent to own period ends. If the home increases in value above the agreed upon purchase price, then it is the renter who benefits when they buy the home. This extra value can be considered equity earned before they even own the home.

Using the Professionals To Find You the Best Rent to Own Contract

Professionals who are experienced with Ontario rent to own homes contracts are your best bet. Companies like Sandstone Management have a team of professionals, including mortgage brokers, realtors, and home inspectors to help you find a rent to own home in Toronto and other areas of Ontario. They can help you secure a rent to own contract, and help you build equity and improve your credit score at the same time. Since mortgage brokers deal with many lenders, they will be able to get you the best rate and conditions when it is time to get your mortgage.