What brokers need to know about rent-to-own options
If the client agrees to the numbers, a private investor steps in to purchase the home. “They have a 20% down payment and they want to help the [renting] family,” Oliver said. “Really, this process is families helping families with our team in the middle, making sure that nobody oversteps boundaries, and everyone is getting an arrangement that is going to be equitable.”
Rent-to-own customers know exactly what price they’re to eventually buy the property for up front, Oliver said, with all conditions pre-negotiated prior to the term beginning. There’s also no penalty to exit early and purchase ahead of schedule – unless the investor has, for instance, a variable-rate mortgage with a differential penalty, which is then transferred on to the rent-to-owner.
Of course, there are plenty of risks associated with rent-to-own products; RateHub emphasizes the importance of a solid agreement with legal protection and clear understanding of contract stipulations among both parties.
Working with a credible company in the space is essential, too, said Oliver, who encouraged mortgage brokers to research those options in more detail and “take the time to understand how rent-to-own can help certain clients – especially in a market where so many people can’t even afford a private mortgage.”