DON'T QUALIFY FOR A MORTGAGE?
For clients who cannot qualify to get a mortgage , the Rent to Own Program maybe the solution for them. The Program is a contract between a Real Estate Investor and a client/clients who wants to own a home. The person or persons who want to own a home cannot qualify for a mortgage for one reason or another. Rather than wait for numbers of years to own a home they enter into a contract with a Real Estate Investor who purchases the home on their behalf. Here is an example.
A client has a 5% or even 10% down payment to purchase a home however due to some credit issues the client does not qualify for the mortgage. The client or clients have the income to carry the mortgage but cannot meet the credit qualification guidelines. The usually options for the client would be to either get a co signer to help qualify for the mortgage, come up with a much larger down payment or wait 1 to 3 years to fix their credit profile until they meet the credit requirements.
The Rent To Own Program. A real estate investor will work with the client and buy the property the client wants. The client has to have the income etc to support the mortgage payments and be able to carry the mortgage at a future date. In other words the client cannot expect the real estate investor to purchase a property the client cannot afford. As part of the contract the client agrees to purchase the property back from the investor at a future date for a set price. Usually the term is one to three years.. Until then the client lives in the property as their own.
Some of the main conditions associated with The Rent To Own Program are the client pays a deposit between 2.00% to 4.00% to the investor which is returned on closing of the contract i.e. the client purchases back the property form the Real Estate Investor. A portion of the rent payment is held back and given back to the client to help with down payment or closing costs on closing of the contract.
Some of the main benefits to the client are they get to move into their home now rather than later. A portion of the rental income they are paying will be paid back to them so they are saving for a larger down payment or closing costs. If the property increase in value above the future set contract purchase price, that increase in value belongs to the client. The contract future purchase price cannot be changed.