This appeared in my weekly email from the Nevada Association of Realtors. They are over 3 years late to the market, but nonetheless I am glad they are here.
Investors Bank on Rent-to-Own Comeback
Rent-to-own programs are making a comeback
as consumers with less-than-perfect credit seek
to qualify for mortgages to get back onto the path
to home ownership. Wall Street firms are increasingly
offering the option to some consumers, allowing them
to rent the home first with the option to buy it later.
This instantly legitimizes rent to own / lease to own / lease options (whatever you want to call them) for so many people that were and still are skeptical about these types of programs. One of the greatest obstacles we’ve faced all along has been this skepticism. People just don’t believe we are going to buy them a home. “What’s the catch?” they would ask.
For some, it has been because rent to owns have a bad reputation. This is especially true within the Realtor community since they have seen this type of model abused so often. It goes back to the landlord that tells their renter, “Hey, why don’t you pay me $300 more a month and give me a $3,000 down payment to have an option to own this home in the future?”
The problem with that scenario is that the renter doesn’t have any reasonable chance to actually get financing in the future. Now, certainly not all landlords do this on purpose, but a surprising majority are expecting and hoping they fail so they get to keep the extra $300 per month and the $3,000 down payment. I know this because I have way too many people that tell me they do lease options and actually proudly tell me how they screw the tenant over. Not cool.
This is one of the reasons why our strategic alliance with Home Today™ works so well. Now when someone calls us to get help in becoming or staying a homeowner, we can offer them multiple options. Our Rent to Own Program may be the best solution for them but there could also be a different option that fits them better.
Some families just need help preparing to get a mortgage which is no small process today. I just experienced it myself because I refinanced my mortgage for a lower rate. I can tell you that being self-employed doesn’t help make it any easier. It can be a daunting task to go through and the amount of paperwork is atrocious.
Home Today™ can also help families receive down payment assistance. There is an extraordinary number of programs that either out-right gift a portion of their down payment, loan, and/or match some or all of what the families put down themselves.
Home Today™ also offers financial literacy counseling which teaches families how to manage their money. What seems to be the impossible sometimes becomes the possible by spending a little less on those items that are not really necessary, like making your own coffee at home for $0.22 a cup as compared to buying Starbucks daily at $4.00 a cup. These financial habits add up for those whom are on a tight budget.
Let us not forget the phenomenal short sale repurchase program where Home Today™ buys the home from the bank, the homeowner is able stay in their home, leases it back, and can get financing in three short years to repurchase their home. This reduces their principle on their loan and gets them out of the threat of foreclosure and losing their home at some point with the bank. Plus, right now we are getting on average a 16% discount on these homes off of the fair market value. Sorry, big guys, we are the only ones that are able to offer this program.
I am glad to see the big guys finally offering rent to owns. It is really hard for a big portion of the population in today’s market to be able to achieve their dream of homeownership. This will make it possible for thousands of families to do just that and it will help to legitimize the whole process as long as they do it the right way.