How Do Rent To Own Home Contracts Work?

“Rent to own” is basically a rental contract with the option to buy a home at a predetermined price after the rent-to-own period ends. A portion of the rent paid goes toward equity and also toward establishing or building credit. For a structured real estate option to be effective in Canada, a non-refundable consideration is paid to the property owner which is usually a few percentage points on the value of the home.

In exchange for this option payment, the home buyer or rent to own home buyer is given the option to buy the home at a settled on price no matter where real estate values go. Having an option does not usually mean the potential buyer is forced to buy the home, only that they have the option to buy it in the future in exchange for the option premium.

Rent to own with option to buy contracts are particularly becoming popular in Toronto, Ontario and also in neighboring Mississauga. The option part of the funds is not counted as a security deposit or towards rent, but applies to the home for the purpose of locking in the current negotiated value even if the real estate market recovers and prices go up.

Caveats include paying rent on time during the rent-to-own period as well as treating the home as a rental during this period. (ie. permission still may be required for making improvements or alterations to the home). Monthly rental amounts are typically somewhat higher in a rent to own home situation but a portion is applied toward the actual purchase of the home creating a forced savings system that helps accumulate the necessary down payment when the transaction is completed.

Many rent to own home agreements will also require minor repairs to be done by the renter/buyer as their intention is to buy the home after the rent-to-own period expires. Major repairs such as roof problems and structural issues remain with the actual home owner until the option is exercised by the new home buyer. A rent to own home program can help renters become home owners as they build equity during the rent-to-own home ownership period. This also provides a time buffer to get credit ratings in order and emerge from prior financial problems reflected on a potential buyer’s credit history. It is highly recommended that properties under consideration be inspected by a qualified home inspector.

A home inspector is often on the list of professionals you’re reputable rent to own home company will put you in touch with before making any decision on a particular property. A rent to own home option in Canada allows the potential home buyer to test a neighborhood and house before committing to outright purchase. Rent to own home programs are becoming more popular in places like Ontario, Canada. In the Toronto area, rent to own homes are widely available.

New Canadian legislation has made it somewhat more difficult to qualify for a mortgage in Ontario. As a result, a rent to own home program can help build the necessary credit history, rating and income to satisfy current Canadian loan requirements. Knowing the future purchase price is already fixed, a rent to own home program can also help lock in the selling price and take advantage of increasing home equity sooner. Recent changes to the laws in Ontario, Canada now make it virtually impossible to obtain a home in Canada with 0% down financing. Home owner insurance is required for all homes purchased with less than 20% down in Canada. Minimum down payments and income verification are now more stringent than prior to the global economic meltdown of 2007-2008. In Canada, there is no requirement to have to deal with banks, mortgage or finance companies when completing a rent-to-own contract.

This allows those that are just building credit or even those with bad credit to get into home ownership while establishing or rebuilding credit. Rent to own home programs may just be the right vehicle for first time home buyers. When deciding on a rent to own home program in Canada, consult with a trusted resource to help you navigate the process. Sandstone Management helps renters become home owners in Ontario, Canada.

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Home Equity Loan Options for Getting Cash or Consolidating Mortgages and Debt

Home equity loans can be your best friend, when you find yourself in a pinch for cash and don’t want to refinance your entire mortgage. These cash out equity loans are considered second mortgages that are held in 2nd position on the property title. In the past home equity loans have increased in popularity with homeowners during periods in which the Federal Reserve is hiking key interest rates.

According to several large home equity lenders, the secondary loan volume increases when interest rates climb, because homeowners don’t want to refinace the first mortgage lien. Senior loan officer, Brendon Daly said, “People don’t want to pay higher interest rates on their 1st mortgage to just get a $50,000 in cash, when they can get a home equity line that doesn’t charge any interest until the funds are accessed. Daly continued, If a borrower has a $650,000 first mortgage that has a fixed rate under six percent, why on earth would they want to refinance just to get a little cash.” As Brendon demonstrated, there are many opportunities and good reasons to take out a home equity loan.

Listed below are six good reasons to cash out your home equity with a 2nd mortgage below:

* Access to Cash for Financing Home Improvement Projects

* Credit Card Consolidation and Fixed rate Conversions

* Down-Payment Funds for Investment Home Purchase

* Cash Reserve Lines for Emergencies

* Tax Deductibility with Home Equity Loan Interest

* Lower Mortgage Payments from Consolidating

Get approved for a home equity line of credit can open the door for home remodeling, as well as investment opportunities. Having a credit line in your back pocket can provide you peace of mind with emergency reserve funds that can really help you stay on the path, when you hit some bumpy roads.. I recommend getting approved for a home equity credit line or fixed rate 2nd mortgage as soon as possible.

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125 Percent Refinance Home Loans For Home Improvements!

This cash-out refinance loans that can reach up to 125% of the market value of the property are made available due to the especially competitive circumstances that rule the current loan market. Thus, a good timing suggests that you need to make use of this situation and seize the benefits from the equity on your home by refinancing and getting extra cash with advantageous terms.

Cash Out Refinance Home Loans

A cash out refinance home loan is a loan that is awarded for a higher amount than your current outstanding mortgage and thus, only part of the money is used for repaying your current debt. The remaining loan amount can be used for any purpose but in this case, it must be used to finance a home improvement project. This last fact will be controlled by the bank or financial institution.

The concept is simple: If you have a mortgage loan of $60,000 and your property’s market value is $100,000. You can easily request a cash-out refinance home loan for $80,000 and use the remaining $20,000 for financing your home improvement project.

Moreover, even if you request a higher loan amount, if the market conditions have changed positively or your credit and financial situation have improved, you could obtain a refinance home loan with a lower interest rate and better loan conditions and save thousands of dollars worth of interests over the whole life of the loan.

125% Financing and Home Improvements

Usually, there is an 85% limit as to the amount of money you can request through a home loan, especially if you have bad credit. Occasionally you can obtain 100% financing for loans made for first time home buyers or for those with a very good credit history. However, lately, lenders are offering further financing. You may wonder how more than 100% financing is possible:

The answer to that question is rather simple. Since the money borrowed will be used for home improvements, the lender is counting on an increase in the market value of the property used as collateral that can compensate the surplus. Besides, even if the raise in the market price of the property doesn’t compensate for the difference, within a short period of time and due to the continuous monthly payments, the mortgage balance would get below 100%.

Bear in mind though, that the money must be used for financing home improvements and most banks and financial institutions will check any home improvement project you may have so as to make sure that you are not faking the purpose. You may be required to present documentation prepared by an architect or another professional and other backing up documentation in order to confirm that the money will be actually used for what you claim it will be used.

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Private Financing For Your Real Estate Investments

Flipping houses for fun and profit?

THE BAD NEWS (For Some): The inventory of houses that are available for purchase is at an all time high. These houses range from older homes that may need remodeling to new or almost new homes. This situation has been created by: 1) The previous several years of selling and financing homes for buyers who could not afford them, resulting in record foreclosures at an all time high. And in addition, 2) The present unemployment situation has forced many people to give up their homes to move to lesser expensive lodging, and in extreme cases, resulting in homelessness.

THE GOOD NEWS(For Others): Anytime there is a situation as described above, it is bad news for many people. Conversely, at the same time, it is good news for others because of the opportunities created by the particular situation – In this case, INVESTING IN HOUSING.

Because of the glut inventory of product (houses) available, prices are down from the previous market period; the old “Supply and Demand” syndrome. Therefore, it is a great opportunity for investors, entrepreneurs, etc. to make profits by taking advantage of these favorable circumstances.

So, let’s assume you are or would like to be one of those who takes advantage of the situation. You have some experience in residential housing or you have a mentor to help you make good decisions whenever you may be buying, selling, and/or rehabbing houses.

There are basically two types of investors who would be interested in the housing market:

1. Those who buy for resale later at a profit (hopefully) or,
2. Those who buy to hold for rental income.

Of course an investor could, and many do, fill both roles.

Now, let’s assume you have the knowledge, experience or mentorship to become involved in the housing market that we are discussing. One more thing we need is the funds necessary to buy, fix-up if necessary, and sell the houses. Also, if you intend to hold houses for rental income, you will need long term financing. So, if you have funds of your own, good credit with banks and other commercial lenders, you are all set, as long as they are lending. But what if you don’t have your own funds, and you don’t have good credit, or for whatever reason you are unable to obtain institutional funding? What to do then? Even if you do have good credit with the banks, that could change tomorrow with the whim of the banks and/or government.

Therefore, let’s consider your options: What if you could create a scenario where in you could conduct unlimited business in this and other markets, and not have to contend with banks and other institutional lenders? What if you could depend on always having financing available, short term and long term, even if your credit was not that great?

Well, you know what? You can do that! How can you do that? With Private Financing. This Private Financing will be from Private Investors and individuals who are looking for better and safer investments than they now have access to.

These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.

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