Rent to own houses in Edmonton are simply homes where a portion of the rent and the up-front deposit are credited to the down payment for purchase of the house in the future. These contracts are also called lease-to-buy or leases with the opportunity to purchase homes.
The rent to own Edmonton homes concept assumes the tenant intends to purchase the property at the end of the rental term, and that they will be able to obtain a traditional mortgage to do so. It is assumed renters will renovate and upgrade the home as if they already own it, although most companies retain the right to approve such changes in advance.
Rent to own programs usually examine the applicant’s credit scores and income prior to initiating a contract. The program may enroll the applicant in a credit repair program, to assist them with qualifying for a traditional mortgage. Some programs make such repair programs mandatory as part of the rent to own contract.
The rent to own Edmonton program allows applicants with poor credit histories, hard to verify income or other barriers to traditional mortgages to begin the purchase process immediately. They provide what amounts to “forced savings,” by applying part of the monthly rent to the amount needed for down payment. In addition, the up-front down payment or deposit goes toward the down payment when the renter applies for a mortgage.
Rent to own contracts include a set price for the property. This price will not change during the term of the contract. The tenant purchases the right to buy the home later for this property price. In the meantime, the lien holder or owner of the property must continue to pay the mortgage and taxes on the home. Tenants in rent-to-own properties provide their own insurance on the property.
Down payments for rent to own Edmonton properties may be as low as $10,000. Monthly rents are higher than market value for the property since the payments include “rent credits” to be used toward the eventual purchase of the home.
Important things to remember for Rent to Own Edmonton homes!
In the event a tenant decides not to purchase the home at the end of the rent to own term, they often lose their up-front money as well as the rent credits paid during the lease. Successful rent to own buyers must be certain they are entering into a contract for the right home in the right location. Applicants must show they can make the monthly rent payments. An applicant with both poor credit and no income is not a good candidate for a rent to own contract.
Renters must be sure they will be able to fix the issues barring them from obtaining a mortgage during the term of the lease contract. If they cannot get a mortgage for the home at the end of the contract, they lose the home and their cash investment. For this reason, rent to own companies might enroll renters in credit repair courses or have them meet regularly with credit counsellors to ensure they are on track.
Rent to own Edmonton companies work with clients up front to determine what credit issues need to be fixed, and how long it will take to fix them. A contract should be customized to allow the renter adequate time to address the problem issues, so a successful sale can be completed at the end of the contract. The company will ensure the home and the renter are a good match and that the renter will likely be able to purchase the home on schedule.
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