Rent To Own is for the home buyer who has credit problems and/or little-to-no down payment. We will find an investor for the subject property who will purchase the home and lease it to you for a set term. A portion of the lease payments made during this term will be used for the down payment at the end of the term. Also during the term it is assumed that the client will be building up their credit score. Now once the lease term is completed, the client will have accumulated a down payment and strengthened their credit score. At this point they have the option and capability to get a mortgage and purchase the home from the investor at a pre-determined price. This financing structure is very similar to leasing an automobile.
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Rent-to-own is a real estate term relating to a real estate agreement which is composed of a rental lease and a purchase agreement where the tenant has an option to buy the property at a fixed price at a specified point of time in the future. It is also known as lease to purchase option, lease option, or a type of owner financing.
The lease resembles that of a typical rental lease where the home owner, the lessor, allows the other party, the lessee, to occupy the property for a monthly payment. The option to purchase the property stated the price at which the property is to be purchased and the time period during which the tenant is able to exercise the option.
Rent to own contracts become very popular during housing market downturns as property sellers may need to vacate the property before it can be sold, and landlords may use them as a way to find good tenants. The seller may attract the tenant by having a specified portion of the rent applied as a credit toward a down payment on the house, or may receive a sum of money for the option giving the tenant time to rebuild their credit if necessary.
First Toronto Mortgage offers Toronto rent to own home financing. If a client has down payment or credit problem, it is an excellent soltuion. Feel free to contact an agent at First Toronto Mortgage, to start a rent to own home financing for your Toronto home today!
Posted by Kevin Somnauth, CFA
First Toronto Mortgage (http://firsttorontomortgage.com)