WHAT IS RENT TO OWN?

1. 1. What does "rent to own" mean?
   "Rent To Own" means that you are going to rent a home with the intention of buying it within a certain time frame determined by you and the owner of the home who wishes to sell it.
2. How does it work?
   The process is very simple - you will enter into two contracts when you do a rent-to-own home. The first is your standard lease that you might sign for any type of place that you want to rent. The second document is called an "option."
3. What's an "Option"?
   An option means that you are buying the RIGHT to buy the house at a set price within a specified period of time (usually 1 to 2 years). You are not obligated to buy the home, you simply have the right over anyone else during that time period.
4. Why should I pay for an option, what do I get out of it?
   The best thing about paying the option fee is that this money is credited towards your down payment on the house when you go to buy it. Unlike a standard damage deposit, this is money that you will have working for you when you go to own the home down the road.
5. What about a damage deposit?
   We do not ask for damage deposits on the rent to own homes - this is a home we want to help you buy and we feel you will take good care of a home that you have ownership interest in.
6. Can I lose the option fee or do I get it back if I move out? The option fee is non-refundable if you move out or are evicted for failure to make your regular rent payments under your lease agreement. It is also not refundable if you fail to obtain financing for the house during your option period.
7. How do I know if I can get financed for the house or not?
   You never know if it can get done or not, but right now many lenders will lend on credit scores all the way down into the low 500's if you have a good job and a good recent history. We will pair you with a lender and they will work with you while you are renting from us to get you into the best possible position to be able to get the financing you need.
8. What if I can't come up with enough of a down payment?
   First, the option fee becomes at least part of your down payment, so you have that. Secondly, hopefully the house will go up in value some while you are renting, so when it comes time to buy we may be able to work with you on what is called a DPA (down payment assistance) program. We will illustrate that for you a little later.
9. What if I get a better job or clear up my credit after only a month or two of renting and I can buy - do I have to wait two years until my lease is up to buy?
   No! You can purchase the property as soon as you are ready to do so! If that's only thirty days after your lease has started then you are out of your lease and into the home - as an owner!
10. What is the price of the house?
    The price of the house is determined by an appraisal or by a BPO (Broker's Price Opinion). The price is FIXED for the period of your lease, so if the property rises in value while you are renting it then you can still buy it for the lower price quoted at the beginning of the lease, less your option fee and other payment credits.
11. Is there any incentive for me to be a good tenant and pay on time?
    Of course! Rent is due by the 1st of the month. If it is received on time we credit $50 off the price of the home when you go to close it. Be careful! If you are just ONE DAY late will cost you the $50 that month.
12. Can I get evicted?
    If you break the covenants of your lease you may be evicted and will lose your option fee and any credits you have built up to buy the home.
13. Who is responsible for maintenance?
    You are the homeowner, so you are responsible for most maintenance in the home. We will, however, help you if something major occurs that was unforeseen - for example if your furnace needs to be replaced or if there is a major roof problem we will help out. Cleaning gutters, cutting grass, slow drains and issues like that will be your responsibility. We do provide access to a low cost maintenance company to help as well.
14. What about pets?
    It is your home - we do not charge extra for pets. However, if you fail to buy the home and move out, you will be responsible for any damages that pets might do.
15. Can you show me an example?
    Sure! Let's say we have the following home - a three bedroom house with a one car garage, family room and fenced yard. Let's say the market "rent" for this house is typically $750 per month.
    
    Appraised value of home: $77,500 (this will be your option to buy price).
    
    Monthly Rent: $750 (equal to the market rent)
    
    Option Fee (down payment): $1,500
    
    At the signing of the lease, you will put down $2,250 ($1,500 option fee + first month's rent).
    
    The two year lease period begins at that time. You have two years to buy the property or you may forfeit your option money.
    
    One year passes by and you have now qualified for financing. You have made all 12 of your payments on time, earning an additional down payment credit of $600 (12 payments times $50/month). You decide to use your option to buy the house. We would draw up a purchase agreement as follows:
    
    Option Price: $77,500
    Less:
        Option Fee (down payment): $1,500
        On time payment credits: $ 600
    
    Final purchase price: $75,400
    
    Let's say the house is now worth $80,000 and your banker says that you need to put a 3% down payment down on the house. Since there is equity to work with we can do this, first we bump up the purchase price to take advantage of the equity in the property:
    
    New purchase price: $77,500
    
    Less: Seller paid down payment (DPA): $2,325
    
    Final purchase price: $75,175
    
    Buy having some equity and appreciation in the property we can help out and make you a homeowner by working the price so that we can combine your money already in the deal with us putting some in for the down payment. Are you ready to be a homeowner? Now is the time and this is the way!