“So, there are no zero downs, then?”
That was the query after a few back-and-forth text messages from someone just starting to explore our program.
“No,” I confirmed. “That would be setting the client (and the operator) up for disaster.”
At Fraser Valley Rent 2 Own, we do not set our clients up for disaster. It is our goal that everyone who enrolls in our program comes out successfully at the other end–with their own mortgage, and with title to their chosen home. We know it will take a minimum of 7-8% of the value of the home to get a mortgage at the end. That’s the amount that needs to be saved up by the end of the rent-to-own contract.
Not going to happen if you start out with nothing.
We start out with about half—4%–because it’s realistic to expect the rest to be saved up if half is already there. In fact, we assure that it will be saved by building a savings component right into the rent. Yes, the rent may be a little steep, but success is almost assured.
I told her that if she found a rent-to-own with too easy terms, to run, because it’s not a credible program.
The deposit isn’t the only thing. Throughout the term of the lease-option, we also provide credit coaching to help our clients meet mortgage requirements. All credible rent-to-own programs do that. It’s in the Code of Conduct that members of our professional association are required to follow.
Ultimately, it’s up to the client, though, to respond to the coaching and to build up their credit-ability.
So, at the end of the term, the down payment is there and the credit score is up to where it needs to be. We expect success!
If we don’t think the client will be able to reach success by the end of two or three years, we don’t qualify them in the first place.
So, bottom line? Easy terms are not necessarily a good thing. If you’re set up for disaster at the end, you’ll be way worse off than a little stiffer terms that help get you to success!