Basics of Rent to Own
Thousands of people rent houses for years not realizing how much money they are throwing away.
What usually keeps renters from being homeowners?
1. Lack of knowledge on how to qualify for a home loan.
2. Fear of jumping into a commitment they don’t fully understand.
3. Fear that their circumstances are so bad that it’s hopeless to even try.
4. Poor credit
5. Lack of time on the job.
When using the Rent-to-Own method, none of these problems present a real barrier. Several of these issues are due to lack of knowledge about real estate transactions and the way the mortgage industry works. These are not actually obstacles…. they are actually perceived obstacles that can easily be overcome with proper education and a team that can support you.
What’s wrong with renting a house?
There is nothing wrong with renting, but it makes more sense to have a portion of your rent being saved each month towards the purchasing of the home you’re in. You cannot build equity if you are only renting. In a traditional rent scenario, the only person who wins is your landlord.
Rent-to-Own can build equity, adding more security to your long-term financial stability.
How Can I Be A First Time Home Buyer more Than Once?
Not too long ago I met a wonderful couple that was very interested in our Rent to Own program. They had been renting for the past 10 years and were really beginning to resent their current residential arrangement. We started discussing how the program works, the monthly credits, how they could find their own home, etc. We started discussing the down payment and I asked them how much they had saved. They told me they were trying to accumulate 10% in their savings account because that was the required amount since they had already purchased a home (10+ years ago) under the First Time Home Buyers Plan.
Actually, this is incorrect!!!
First Time Home Buyers Plan is basically a form you fill out when you are getting your mortgage to notify the government you are withdrawing from your RRSP’s to purchase a home. On that basis, it allows you to typically borrow without any tax implication to your income, and pay back a little at a time every year.
For the record, anyone with decent credit and who has a minimum of 5% can apply for a mortgage. The funds need to be in your savings for you to eliminate any income tax implications. If your funds are in an RRSP you can withdraw under the First Time Home Buyers Plan- as long as 5 years have passed.
If you fall into either of these categories you need to give us a call!
Home Ownership may be closer than you think!