Rent to Own Frequently Asked Questions
How Does Our Rent To Own Program Work
It is Simple: You move into your home today under a Purchase and Sale Agreement to be executed at a predetermined date at a pre-determined price in the future.
During your Rent to Own Program Term, our team of experts will work with you to get you “Bank” ready before the end of the Rent to Own period.
The term of your Rent to Own Program is set to provide you enough time to clean up past credit problems or improve on any aspect of your Credit Profile required by current Mortgage Guidelines.
In addition to helping with your Financial Profile, we will help you save enough money during the Rent to Own Term so you have the required Down Payment for your Future Mortgage.
A portion of your monthly payment goes towards rent/lease and up to 20% of your Monthly Payment goes into a Savings Component used towards the Final down payment for your future mortgage.
This savings component is often referred to as Option Credits (Credit given to you towards your mortgage Down Payment when you exercise the option to buy your home).
The total savings accumulated during the Lease are added to your initial Down Payment to form your final down payment at the end.
With our Rent to Own program, you will know exactly what your Future Purchase Price, Down Payment and Mortgage would be.
This allows our team of experts to properly position you for a mortgage based on today’s lending guidelines.
How much of a down payment do I need?
The Down Payment required depends on your Credit Profile when you apply.Remember, the only way a Rent to Own Program will be successful is if it ends with YOU getting a Mortgage. Therefore, we have to ensure your Credit Profile and Down payment at the end of your Ret to Own Program are what the current mortgage guidelines demand.
We don’t make the Mortgage Qualification guidelines but must be guided by them to ensure successful Rent to Own campaigns.The minimum Down payment is the greater of 3% or $ 10,000 Minimum*We have a variety of options for funding you application. If you have 3% or $ 10,000 to start, there is a very good chance we can help you get into your home “today”.Please note that our team are experts in Mortgage and Credit Improvement. If you have a low Credit Score, it does not mean you will be declined. If we can help you improve your Credit Score and Profile to bank standards by the end of the Rent to Own Program, we do not place much emphasis on where your credit score or profile is today.
Again, we will work with you to get Bank/Mortgage ready!If you have 3% or $10,000 and want to buy a home…Get Pre-Approved today!Note: *Having the minimum Down payment Requirement does not mean you are automatically approved. The starting Down Payment may be subject to change
If accepted in your program, is there a fee?
If your Application is Pre-Approved, there is no fee to submit your application. There is however an initial program deposit which will be credited back to you when you exit our program.The Activation fee is truly to ensure you are serious about moving forward and completing the enrolment process.
What are some of the reasons I might be declined for your program?
Remember, a Rent to Own Program is ONLY SUCCESSFUL when you buy your home at the end. Therefore we have to ensure we have done the proper underwriting for your success!Not everyone can be approved for our Rent to Own program and there are a few reasons a prospective rent to own tenants is declined.
Here are the common reasons for an application to be rejected…o Applicant does not meet the minimum down payment requirement so The house you choose is:o Too Rural Not in a Good State of Repair Applicant Income is not stable or verifiable Applicant income does not support the Value of the Property you choose. A good Purchase Price guideline is 5 times your total household income.o
Applicant Credit Profile cannot be improved to bank standards by the end of a Rent to Own Program
My credit isn’t great, can I still qualify?
We are not Credit Score Driven.As long as your Credit Score and Profile can be improved to Bank Standards by the end of the Lease Term, where your Credit sits today will not be the deciding factor in your approval.Remember, we have a team of Credit Experts who can help!
What if I’m self employed?
We love applicants with Entrepreneurial spirit!We do not restrict Self Employed client.Most Self Employed Applicant are struggling to get Mortgage approval as many mortgage lenders have changed their policies to really restricted Self-Employed on their pursuit of Home Ownership.Remember, the ability to get into a mortgage at the end of your Rent to Own program is the single most important component.
We have to ensure Self-Employed clients have the right “Credit Profile” lenders are looking for by the end of the Rent to Own Program
Who is responsible for the maintenance of the property during a Rent to Own Program.
As the home will be your future home and as you are the tenant, you will be responsible for the upkeep of the property.Before any Rent to Own program is started, there is a Home Inspection completed. This Inspection is to ensure all parties to the program understand the condition of the home.
If there any repairs to be done before or after close, the repair schedule is agreed to before the program starts. This schedule will outline the repairs, estimated costs and who will be responsible for their completion.Once the program starts, the maintenance of the property will be as detailed in the Lease Agreement between the Tenant and the Investor/Funder.Again, this will be your future home so keeping it in a good state of repair will benefit you are the end!
Are Property Taxes and Insurance included in my monthly payment?
When you make a Rent to Own Payments to your Investor/Funder, the Investor is expected to use the funds to make sure the Property Taxes and Home Insurance are paid on the Property.
Who chooses the home?
You get to choose the home with your Realtor. We do not force Tenants to use our Realtors and honor the relationship you have with your Realtor.
If you do not have a Realtor, we have been working with Rent to Own trained Realtors for years and can make 3 referrals to you if needed…you pick the Realtor and the home!
Who does the home inspection?
As with any Property you will own, you want to make sure the “bones” of the property are strong. Things like Roof, Doors and Windows and Mechanical Systems.
As this will be your home, you are expected to arrange and pay for a home inspection as part of the process.If you need help selecting a Home Inspection company, we have references which can be provided.
Do you do Rent To Own for new homes as well as resales?
Yes, either tyoe of property is acceptable.NOTE: With New construction, there are sometimes rebates associated with the purchase and it is good for HOS Financial to understand these rebate arrangements so proper allowances can be made.
Do you do lease purchase for mobile homes?
No. Mobile homes do not qualify for our Rent to Own Program…sorry!
What happens if I can not buy the house at the end of the lease because I am not qualified?
Before we start any Rent To Own program, the Exit Strategy is clearly defined. What is an Exit Strategy?The Exit Strategy is the All-inclusive plan to be executed to ensure you are ready for a Mortgage at the end of the Program term.Everyone understands the expectations and what has to be done to ensure a successful Rent to Own Program, before it begins.
Unless something that could not be predicted happens, there should be NO Surprises at the end.If there are extenuating circumstances that prevent the Rent to Own program from completing, we can extend the Program to allow these circumstances to be overcome.
If you have been a good tenant there will be no reason not to extend.NOTE: If you do not follow the Credit Improvement Program, do not make timely Rent to Own payments during the term or do something else that has not been discussed which will negatively affect your ability to exit the Rent to Own Program, there is a good chance we will not be able to extend the Rent to Own program and your Down Payment can be put at risk.However, if you follow the program laid out for you, we have a VERY HIGH SUCCESS RATE!