Is Rent to Own a Good Option?
For many families who have seen difficult financial times during the recession, the Rent to own option is a blessing. If done correctly, it can be a way to move into a great house now while setting a portion of you rent aside as your down payment for the future. A forced saving of the down payment in a way, while credit is being re-established or repaired. This is particularity valuable for past Bankruptcy or Consumer Proposal.
If a person has seen their credit affected negatively and they have either had credit counseling, a Consumer Proposal or even a Bankruptcy and they are discharged, it is possible to rebuild credit to a point where they can once again qualify for a mortgage.
The general guidelines for buying a home with 5% down after Bankruptcy or Consumer Proposal according to CMHC are as follows:
2 full years discharged from the Bankruptcy or Consumer Proposal
1 full year of clear re-established credit of about $5000.00
Down Payment from own Sources
1.5 % of the Purchase Price as closing costs from own sources
A confirmed stable income source
Credit from sources other that just store cards is one thing Mortgage Lenders look for Secured Master cards from Capital One or Secured Visa from Home Trust are the first building block to restoring credit. These should be followed up with a Loan or Line of Credit from a Bank Trust Company or Credit Union.