Do You Want To Become A New Homeowner Or Stop Foreclosure?

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Do You Want To Become A New Homeowner Or Stop
Foreclosure?
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Synopsis

1. What is Rent-to-Own a Home
2. Advantages and Disadvantages of Rent to Own a
   Home
3. A Guide to Power of Sale or Foreclosure
4. Power of Sale Options and Myths
5. Credit Management and New Trends

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What is Rent-to-Own a Home

• You may find rent-to-homes more often in the
  United States, they do show up all over in Canada
  also, especially in the states of Ontario,
  Alberta, and British Columbia where the price of
  housing are typically high. The main reason why
  these rent-to-own homes are more appealing
  because you can get them at affordable rates even
  if you are not eligible for a mortgage. The
  investor or homeowner will rent out a house that
  is on their name already, similar to the landlord
  of the apartment. Each of the rental income comes
  with a specific rental agreement that the tenant
  must afford if he/she wants to live there. There
  are two types of contracts offered in this
  situation lease purchase and option-to-purchase
  . If you choose a lease-purchase, it means you
  have agreed to buy the house at the end of the
  term. If you choose option-to-purchase you will
  sign the agreement that has the option, but it
  will not bound you to buy the house at the end of
  the term.
• In most cases of rent-to-own agreement, the
  tenant is required to pay the option
  consideration. This is a negotiable but
  non-refundable deposit, which usually amounts as
  3 to 5 of the homes price. The option
  consideration gives tenant the right, but not
  bound him/her to buy the house. If you dont wish
  to pay for the option consideration, the house
  owner might still let you rent the home but it
  will not give you the right to purchase the home
  at the end of the rental period. It totally
  depends on the terms of the agreement, the part
  or full sum of money may go towards the down
  payment on the home, but it is also a fact that
  every agreement is different.

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Advantages and Disadvantages of Rent to Own a Home

• Advantages or Disadvantages for Real Estate
  Investor
• Advantages
• The house is something more desirable than the
  average apartment, they end up in a position to
  charge at a high rate for rental fees.
• Since a specific percentage of the monthly
  payment is going into the pocket of the seller,
  the investor will also receive a handsome profit,
  especially once the house is sold.
• If the tenant chooses the option-to-purchase
  consideration, the fee of the deposit can be
  collected up front. If the tenant fails to
  purchase the home at the end of the term, they
  will lose their deposit to the landlord.
• If the contact is made on a lease-purchase or the
  tenant wants to buy the property, the seller will
  earn from the rental and also retains the money
  but his house will be sold officially.
• Disadvantages
• Rather putting the property on the sale right
  away, the seller has to undergo tenant screening
  processes such as credit and background checks.
• If the contract is made on the basis of
  option-to-purchase, the renter is not bound to
  purchase the property at the end of the term. The
  deal can be terminated anytime when the rental
  agreement expires. In this case, the seller has
  to find another renter and go through the
  screening process again.

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Advantages and Disadvantages of Rent to Own a Home

• Advantages and Disadvantages for the Tenant
• Advantages
• If the contract is made on the basis of
  option-to-purchase, the tenant will be provided
  with the right to cancel the rental agreement at
  the end of the term.
• If the tenant has a very poor credit score, few
  years of renting will provide them time to make
  their credit score better through other means
  such as credit payment on time.
• If the asking price is finalised, the tenant will
  then pay the price for a home which does not
  include the rent payment at the end of the
  contract, even if the prices fluctuates in the
  market.
• Disadvantages
• If the credit score and the finances of the
  tenant not improved by the time, the rental
  agreement expires. He or she will not receive the
  necessary financing to own the house.
• In some rent-to-own cases, unlike the apartment,
  tenants are bound to make the repairs and
  maintenance. They might have to pay for the
  association fee, insurance, and property tax
  also.

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A Guide to Power of Sale or Foreclosure

• Facing Power of Sale or Foreclosure in Canada
• If a person receives a letter from the lender or
  bank threatening the power of sale or any
  judicial sale proceedings the first thing a
  person should do is to contact the lender right
  away. If you have a history for making your
  mortgage payment on a timely manner and a rare
  occurrence such as injury, illness, job loss has
  forced you to miss a few payments, the lender
  should be asked to work something out directly
  with you.
• Selling the House Before the Lender Sells It
• If nothing is going in your favour, it is better
  to sell the home by your own self. If you sell
  the home before the lender does, then it will not
  be considered as a power of sale or foreclosure
  and that is why will not be held against the
  credit. In the end, you have to pay the lender
  back with all the proceeds of the sale of the
  house.
• Losing a Home in Power of Sales or Foreclosure
• If someone loses the house to the power of sale
  or foreclosure, it will stay for six years on the
  credit report.

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Power of Sale Options and Myths

• The Options Available for Homeowners
• Since the power of sale can proceed quickly, any
  homeowner in Canada who has received a letter of
  power of sale should contact the lender
  immediately. The reason for this is, even the
  efficient power of sale process is time-consuming
  and expensive for the lender compared with the
  typical loan. Therefore, most of the lenders will
  recover their money through normal loan payment
  rather than the power of sale. If the homeowner
  makes a late payment or missed a payment the
  results of rare occurrence, then it is the
  responsibility of the lender to use an
  alternative payment plan that provides the best
  possible outcome for the lender and the
  homeowner. The power of sale should be avoided
  all the time.
• In some situations, the lender may not be able to
  worth with the homeowner such as orphaned
  mortgages, where the lender is not doing the
  business anymore in Canada. This is fortunate for
  the borrower to still hold to his property even
  if the lender is not able or willing to work with
  him. The borrower needs substitute financing.
  Traditional financing offers the best rates only
  if the borrower is completely eligible.

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Power of Sale Options and Myths

• Myths
• The power of sales takes no time This is true
  that the power of sales takes less time than
  other home sales but it does not mean that it
  happens overnight. There are still much paperwork
  and legalities that should be completed before
  you take the property ownership.
• The deal is final It is one of the biggest myths
  about the power of sale. If specified in the
  agreement of purchase, the lender or bank has the
  right to cancel the deal anytime, if the power of
  sale owner of the property catches up on the
  payment of mortgage before the deal closes. It is
  your duty to consult a lawyer before signing the
  agreement of purchase and make a clause that the
  deal must go through even if the property owner
  is able to make their mortgage payments again.
• Properties sold under market value When it comes
  to the power of sale properties, it may seem like
  a very good deal but in fact, they are sold as
  per their worth and not under the market value.

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Credit Management and New Trends

• Reactive to Preventive
• The proactive credit managers do not wait for the
  things to get out of hand. They know where to
  find the opportunities and acts according to it.
  It is very important to pre-screen you customers
  with efficient and effective due diligence
  methods. The focus on prevention will let you
  detect any payment problems in advance.
• Standard to Tailored Service
• Companies also acts like customers, they always
  want tailored services rather than a standard
  solution. The trend is not shifting as the
  companies are now moving towards a bespoke
  approach rather staying with the standardisation.
  However, drawing up a clear policy on any
  deviations from the standard terms so that both
  the parties can understand what to expect. It is
  also necessary to pursue prompt payment to
  achieve a higher turnover.

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Credit Management and New Trends

• Collaboration is Necessary
• For credit management purposes it is important
  not to works with the sales teams only, but
  finance and marketing should also collaborate.
  Clear communication about the credit requirements
  with marketing colleague or with prospect
  companies is now becoming a new trend.
• All about Data
• Improving processes, preventing fraud, staying
  ahead of the competition all a company wants.
  Data analyses provide a wide range of
  possibilities, the reason to use big data is
  pinpointing the exact information that is
  relevant to the company and how the company can
  analyse it more effectively.
• Value Management
• The credit manager has a limited number of tools
  and sources to serve every customer in the best
  way to generate a good level of profit. It is now
  becoming important to have a watertight policy
  regarding the kind of customer the company wants
  to work with in order to protect the business.

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• For more details, please visit
• https//homeownersoon.com/rent-to-own-program/

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