When rent-2-own programs are operated ethically and professionally, and the clients act responsibly, the result is almost always successful.
It’s exciting for the new homeowners, many for the first timers, when they complete the program, but also for us, for having successfully helped another party become homeowners.
Never before have we gotten to celebrate that success twice in one week.
But that’s what happened last week. Just in time for Thanksgiving.
One was a couple who entered our program four years ago. They’d been together for a short time, living in a rental home that was in rough shape. They dearly wanted to get out of it and into their own (presumably better) place.
But they wouldn’t qualify for a mortgage due to insufficient funds for a down payment, too much debt, and an inadequate credit file; lot’s of work was needed!
But all those issues can be fixed simultaneously. So, they signed up for the program. They searched for a suitable home in Sicamous, where they were living, and moved in, together with a lease-option contract committing them to meet mortgage qualifying standards and take ownership after three years.
Along the way, they added another life highlight, getting married in the beautiful back yard of the property they would soon own.
Three years later, they’d saved up for the down payment (through surplus rent) and fixed their credit profile enough to qualify for a mortgage. But they still carried too much debt to qualify for a mortgage. (Note: it’s all about the ratio of debt to total income.) They needed more time to pay off some of their debt and/or increase their income to improve the ratios.
In circumstance like this, we can sometimes extend the term of the lease-option, and so we did that for one extra year.
Now they qualified and are happy owners of a beautiful home and yard in their chosen community.
The other situation was quite different. It was a rescue from foreclosure.
I love these kinds of deals.
Son-in-law with his wife and children lived on the main floor. Mother and father-in-law lived in the basement suite. The title was in son-in-law’s name. But poor financial decisions and a sloppy payment history had put him into financial trouble with the mortgage holder. A foreclosure was already initiated.
They approached me to see if I could rescue them from that, which would allow them to stay in the property.
After examining the situation and creating certain conditions, I agreed to take them on. But the contract would be with the father-in-law, not the son-in-law.
And the bank agreed to withdraw the foreclosure in favour of us (our investor) buying out the property for enough to pay out the delinquent mortgage, and a little more.
The father-in-law couldn’t have simply bought out the son-in-law at the time because he needed some credit repair and to save up more for a down payment.
But he was the model of responsibility! Long before the three years were up, he’d reach an acceptable credit score. But he still needed to complete the three years to create an adequate credit profile history. And, besides the down payment savings accumulated through surplus rent, he had saved up considerably more.
When the three years was up, mortgage qualification wasn’t difficult. And we also celebrated this one last week!
The young family remained on the main floor of the home they’d lived in for years and continue to do so; the mother and father-in-law remain in the suite in which they’d lived for many years.
They are happy owners once again, the only difference being that the father-in-law is now the title holder instead of the son-in-law.
Circumstances vary, but when clients are set up for success and then act responsibly with their lease-option agreement and the program developed to get them to mortgage qualification, they succeed.
These two new homeowners had a lot to celebrate this Thanksgiving!
We wish there were more of them.