Can you help me with a rent 2 own?
We get requests from a people representing an array of circumstances, wondering if we can assist them to get into home ownership.
Can you help me if . . .?
The general answer is always: “It depends.” Our basic criteria for determining whether rent 2 own is a good fit for you is “we can help if you are within ‘shouting distance’ of qualifying.”
Ultimately, we can buy time for you to get to mortgage qualification, while already enjoying the home you will purchase at the end of the term. We cannot, however, circumvent qualification standards.
Here are some of that array of circumstances, and what we can do.
- I don’t have good enough credit to qualify for a mortgage. Can you help?
The answer is Yes. Credit coaching is an integral part of our program. Everyone in our program commits to that. Almost everyone, with proper coaching and a strong commitment to the effort can improve their score enough to qualify for a mortgage within three years. If that’s all that’s keeping you from mortgage qualifying, rent 2 own is a good fit for you.
- I don’t have enough down payment. Can you help?
The answer is Probably. Many join our program because of insufficient funds currently stashed away for a down payment, but with the hope of increasing that during the term. We assist by building a savings component into their program so that they will have an adequate amount for down payment and closing costs at the end. It means a high monthly commitment during the term, but is, ultimately, what you’re facing to get into home ownership with or without a rent 2 own. The difference is the incentive/commitment to the savings and the opportunity to already live in that home instead of waiting until the funds are accumulated.
- I don’t have any savings for a down payment. Can you help?
The answer is No. Please read my special post on that topic here: Why Do We Need a Deposit for Rent 2 Own?
- I’m new to the country and don’t have a Canadian credit record, yet. Can you help?
The answer is Yes. Just as we can improve a credit score over 2 – 3 years, so we can help you build it from scratch over that same period. The same goes for building a credit fund for a down payment.
- I’ve just been discharged from bankruptcy. Can you help?
The answer is Yes. There is a myth out there that you need to be seven years clear of bankruptcy to qualify for a mortgage. Not true. Technically, you only need two years clear of discharge, provided you qualify on all other counts. Likely you won’t, as you will need to rebuild your credit, and likely won’t have much savings, either. Both can be fixed simultaneously over the next 2 – 3 years.
The exception is if you had a foreclosure included in the bankruptcy. Then you will likely have to wait six (not seven) years. But you can get into a rent 2 own after about the third year, finishing your qualification during the last few years of the waiting period.
- We are facing foreclosure on our home. Can you help?
The answer is Yes. In fact, this is an ideal situation for rent 2 own. What we do is buy your home from you at a price high enough to pay off your outstanding commitments but below market value, then rent-2-own it back to you for several years while you rebuild your credit worthiness. Then, when you again reach qualification, we sell it back to you, probably again at below market value.
- The banks have only qualified me for “X” amount of mortgage but I can’t get what I for that. Can you help?
The answer is No. As noted above, we can’t circumvent qualification standards, only buy time to meet them. In fact, due to future unpredictability (we’re qualifying you two or three years before reaching mortgage standards), we have to build in a bit of a “caution factor,” so our qualifying limit is, if anything, more conservative than lenders’ current standards.
- I’m self-employed and the banks hate that. Can you help?
The answer is Probably. Lenders are tough on qualifying self-employed people because of the uncertainty of their income, requiring at least two years of records. But many self-employed people, regardless of their gross income, report a low net income, because of the many deductions they can claim. Unfortunately, it’s the net income that the lenders assess (with perhaps a bit of a fudge factor) for mortgage qualification.
If that is your situation, and your deductions are such that they can be foregone for a couple of years, leaving a much higher net income to report on your income tax, then we can help. We guide you toward setting up a higher reportable income over several years’ reporting periods while in a rent 2 own so that you can show the lenders a high enough income to qualify for the home at the end of the term.
Of course, you will have to pay taxes on that higher reportable income for those years, but may be able to recover some of that after you have qualified for a mortgage and taken title.
- I’m in a Consumer Proposal. Can you help?
The answer is Yes. This is much the same scenario as a bankruptcy, the only exception being that we may be able to qualify you for rent 2 own prior to completing your payout schedule if you are close to the end. We just need to add the remaining time onto the minimum two years.
In all cases, though, qualifying for rent 2 own is not automatic. We look at all your circumstances to assess the likelihood of success at the end, and only accept you into the program if we are confident you will succeed, and if we are both comfortable working together to make that happen.
