Rent-to-own is nothing more than renting with the option to buy. The deal is setup using an Occupancy Agreement (lease) and an Option to Purchase Agreement. With rent-to-own, the tenant-buyer has the option to purchase the home at a pre-determined price within a given period of time.
Rent-to-own is also commonly known as lease to own or lease option.
Benefits of Rent to Own
- Build equity (through the initial option consideration and monthly option credits);
- Build sweat equity (through building improvements);
- Take time to repair/establish credit.
How Does Rent to Own Work?
- With one of our partner mortgage professionals, we assess the tenant-buyer’s current situation, and determine what they will qualify for after completing our Home Ownership Preparation Program.
- With one of our partner real estate professionals, the tenant-buyer selects a homes that will meet their requirements, and that they will be able to afford.
- We negotiate the purchase of one of the selected homes.
- The tenant-buyer puts forward a small option consideration, usually about 3% of the purchase price of the home. This is credited towards the purchase price at the end of the program.
- The tenant-buyer makes monthly payments and a portion of each payment accumulates additional credit towards the purchase price when they purchase.
- During the rent-to-own program the tenant-buyer works to establish or repair their credit.
- At the end of the program the tenant-buyer applies for financing through one of our partner mortgage professionals.
- With the accumulated credits for the down payment and a mortgage pre-approval, the tenant-buyer purchases the home and officially becomes a homeowner!