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

Real Estate News Article

< Back

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

Written By: Jaymi Naciri
Tuesday, December 12, 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

Updated: Wednesday, December 13, 2017

Using Your Homes quot;Deadquot...
Question. Our house is free and clear. We have a 100,000 home equity line of credit, ...

Ask the HOA Expert: Repercussi...
Question: What are the possible repercussions when a board throws out a member decisi...

REALTOR Analysis Of Tax Bill I...
It is no secret that the National, State, and Local Realtorreg; associations are strongly op...

Copyright ©2017Realty Times®. All Rights Reserved

Housing Rebound: Factors to Consider
In Miami we have had an incredible year of growth with an ever shrinking supply of condos...

Hoteliers Buy Versace Mansion at Auction
Gindi Family and Nakash Family of New York were the winners of the auction for Casa Casuarina...

Stunning Estate for Sale on Allison Island
Allison Island is one of the man made islands comprising Miami Beach. One half of the island...

Avant Garde and Luxurious Penthouse on Fisher Island
Fisher Island is home to some of the highest net worth individuals in Miami. It is a private...

6000 Indian Creek, Condominium Spotlight
6000 Indian Creek is a Sieger Suarez project that was completed in 2007 and consists of...

$35 Million Buys you THIS on Star Island
$35 Million for a home on Star Island is par for the course in Miami Beach real estate....

Development Update
It is looking like a dusty winter season in Miami, with all the construction rapidly underway,...

North Bay Road Charm, 4330 North Bay Road
4330 North Bay Road is a stunning example of Mediterranean architecture in Miami Beach....

Best Home Improvements for Resale Value
It could not be a better time for a homeowner to list their home for sale in Miami. The...

Biscayne Gets a New Development
The Melo Group of developers acquired 601 NE 23rd St last year and have conceived of 23...

520 West Ave Residence 2301
520 West Avenue is home of the Bentley Bay. Bentley Bay is comprised of two modern towers...

Spice 2013, Guide 101
Miami Spice is a program whereby most of the restaurants in the city encourage people to...

Hollywood has a New Hotel
Margaritaville Hollywood is coming to Hollywood Beach and is likely to completely alter...

Sustainable Waterfront Home on Normandy Isle, 1.85 Million
Rarely on the market do we find completely sustainable, off the grid, homes in Miami Beach....

Housing Inventory on the Rise at the Close of Summer
The Wallstreet Journal released numbers via Realtor.com regarding the inventory of available...

Warm Spanish Style Home Listed on the Sunset Islands
1844 W. 23rd Street is listed on the Miami Beach luxury real estate marketplace for $11...

Former Gansevoort Getting Complete Eco-Renovation
Last year the Perry Hotel, formerly the Gansevoort, was purchased for $230 million. The...

Affordable Luxury Waterfront on Hibiscus Island
A home that is considered affordable in Miami terms for waterfront is generally between...

Bart Reines New Masterpiece Released on the Market
Bart Reines is one of the worlds most impressive modern architects living, and he has just...

New Listing on La Gorce Island
98 La Gorce Court has just been listed for sale. This over 7800 square foot home with 8...