How would you feel if you made plenty of money to afford a home, but you were not able to get approved for a loan because you were self-employed? Or what if you paid all your bills all your life, but a medical issue forced you into bankruptcy, and now you can’t get financing to buy a home?
These are just two examples of the many scenarios we work with in our Rent to Own program. We are the third party option, outside of traditional lending institutions, that provides an opportunity to get financing for those who do not fit within standard guidelines.
The fact is, there are a vast many individuals out there who are not ideal borrowers by bank standards who can, nonetheless, afford mortgage payments and handle the responsibility of home ownership. We base the approval process for our program on one thing: the potential of the Rent to Own tenant to be ultimately successful in purchasing the home.
This rule has served us well for almost 5 years. More than half of the tenants who’ve been through our Rent to Own program are now homeowners. Many others are ready to buy as soon as they are approved for traditional financing.
However, not all is perfect in Rent to Ownville, as about 16% have “walked away.” The number one walk-away reason we’ve seen has been divorce. That’s a tough one to screen for in underwriting.
There are other reasons for walk-aways, such as job transfers or loss of employment. One person inherited a home. Unfortunately, some just give up. We can’t always know the full truth behind walk-aways.
This truth we do know: not everyone fits into the rigorously-regulated world the government has imposed on the mortgage industry through Dodd-Frank. Some regulations are necessary to protect those who need it, but there will always be those for whom creative solutions are required to realize the dream of home ownership.