How Does The Option Deposit Go Towards the Purchase of the Home
Prior to entering into a Rent to Own agreement, you will be required to provide the homeowner with an option deposit, better known as a down payment. This money is your vested interest in the home and will be fully (100%) credited back to you once you are in a position to buy the property.
One of the questions we are asked all the time is, “why is a down payment required prior to moving into the home?”. One of the main reasons is the owner of the property is looking for a tenant that is going to look after and maintain their home as if it was their own. By offering a down payment, it shows the owner that you are serious about owning the home and have no intentions of leaving anytime soon.
In other words, it shows your commitment to the program and your seriousness about building your down payment to 5%.
The greatest benefit to the future homeowner is the ability to control a property with limited capital investment. It is particularly useful in a rising market where the buyer eventually purchases a more valuable property, or flips the property to another and pockets the difference between the option price and the sales price. When you purchase a home conventionally, you must pay at least 5% down. If you were to purchase a home that was $300,000 you would require approx. $18,000 – $20,000 for a down payment including your closing costs. With our program, you pay first and last month’s rent and an affordable deposit with the intent to help you save for the down payment.