Real Estate News

Innovative Rent-To-Own Program Could Be The Answer To Your Down Payment Dilemma


Written By: Jaymi Naciri
Wednesday, December 13, 2017

Strapped for cash and desperate to buy a home? We hear ya. While todays homeownership rate is trending back up after reaching its lowest level since 1965 last year, there are still thousands upon thousands of people who would love to become homeowners but who are stymied by the lack of a down payment.

Yes, loans you can get through the Federal Housing Administration FHA require as little as 3.5 down, and some other loans out there drop that minimum down payment even lower. But rents that just continue to rise across the country can keep cash-strapped folks from being able to get together the savings required to get in the door - literally.

Rent-to-own company Home Partners of America may have an answer. Yes, rent-to-own.

Before you scrunch up your face at the idea of something that sounds too good to be true or something that brings back memories of "old school" arrangements that could prove costly for potential buyers in more ways than one, its important to know that there are some key differences here. What Home Partners is offering is unique, with features that benefit the renter/buyer. Thats not necessarily so with some other rent-to-own options like owner-occupied homes and companies who buy distressed homes through bulk foreclosures with the intent to rent them out and potentially sell them to tenants. Some of these other options have resulted in tenants who are locked into contracts that require them to pay hefty upfront deposits - deposits that could sometimes approach what they would need for a down payment in some areas

"Rent-to-own companies have a poor reputation in the housing industry for taking nonrefundable deposits from tenants who clearly wont ever be able to qualify for a mortgage or afford a home," said Realtor.com. "Home Partners doesnt take a nonrefundable deposit, so if the homes value declines or they decide not to buy for any other reason renters can simply walk away."

The rent-to-own program through Home Partners keys in on desirable locations, making the idea more viable from both a financial and desirability standpoint. Instead of searching for a needle-in-a-haystack home for rent with the option to buy, "Home Partners of America works with prospective homebuyers... to identify and purchase properties that the consumers select, but cant buy themselves," according to Moodys, said HousingWire.

"The prospective homeowner chooses a property that he would like to eventually buy, and if the property fits HPAs criteria and the tenant qualifies, HPA buys the property and the tenant enters into a lease and Right to Purchase Agreement that allows the tenant to buy the property at a pre-determined price during the term of the lease, which is typically between three to five years. The purchase price typically increases by 3.5-5 per year throughout the term of the lease."

Additionally, this mortgage product "applies some of the appreciation in their homes value during the time they have lived there toward reducing the down payment," said Realtor.com. "In areas with even modest home-price appreciation, that could reduce the down payment requirement to almost nothing. If the home fails to appreciate or if the tenant opts not to purchase, they can simply walk away."

The program has been around for five years, and Home Partners has purchased about 8,000 homes in more than 50 cities so far. As rents continue upward, growing the affordability gap for many homebuyers, its not surprising to see this programs popularity growing in lockstep. Loans for the program go through Pennsylvania-based lender New Penn Financial and are backed by mortgage companynbsp;Fannie Mae.

"Not unlike a traditional house hunting process, youll be working alongside a real estate agent to view listings that fit your budget, life>

Copyright© 2017 Realty Times®. All Rights Reserved

 

Map SearchClick here for a free Market AnalysisBuyers: Search here for your Dream HomeSubscribe! Sign up to recieve our Newsletter!Real Estate Outlook
Facebook linkedin twitter youtube googleplus
Updated: Thursday, December 14, 2017


Why The Next Two Weeks May Be The Best Time To Buy New Construction All Year

If youre looking to buy a home and you would really like to get something in escrow before the end of the year, you might be facing a "slim pickens" situation. Inventory issues have ...
> Full Story

How To Create Year-Round Home Curb Appeal

Exceptional curb appeal will add to the enjoyment and value of your property and home. Maintaining your curb appeal throughout each season may pose its challenges, but with these tip...
> Full Story

Using Your Homes quot;Deadquot; Equity

Question. Our house is free and clear. We have a 100,000 home equity line of credit, and the interest rate is somewhere in the neighborhood of 7 percent. We itemize tax deduct...
> Full Story

Ask the HOA Expert: Repercussions When A Board Throws Out A Member Decision

Question: What are the possible repercussions when a board throws out a member decision voted on at the Annual Meeting?

Answer: If member approval is required to do w...
> Full Story

REALTOR Analysis Of Tax Bill Is Worth Examining

It is no secret that the National, State, and Local Realtorreg; associations are strongly opposed to certain provisions in both the House and Senate versions of the current tax refor...
> Full Story

Why Chinese Real Estate Investors Are Still Flocking To Canada

Despite taxes on foreign real estate buyers in the Vancouver and Toronto areas, Chinese interest in Canadian real estate continues to have an impact in both regions. In B.C., where t...
> Full Story

Purple Power: How To Use Pantones 2018 Color Of The Year

Seeing a whole lot of purple recently? Its not an homage to Prince. Its Pantones Color of the Year for 2018, and its about to be everywhere.

Pantone, the worlds leading color a...
> Full Story

The Introverts Guide to Hosting Holiday Get-Togethers

So you somehow got roped into hosting a holiday get-together this year, which means dozens of family members will be descending upon your house, and... this is your basic nightmare. ...
> Full Story

Get The Look: Transitional-Style Kitchen

Transitional >The Basics: Mixing Old and New

Fundamentally, transitional >

Often this means taking evocative traditional shapes and applying a contemporary finish to them....
> Full Story

What To Expect from Your Solar Energy This Winter

What happens when you >

Preparing for Winter

Winter is known for drastic changes in temperatures above and below freezing. It is important to inspect your panels and r...
> Full Story



Copyright ©2017 - Realty Times®
All Rights Reserved.