Top RTO Tip: Avoid Zero-Down Arrangements

I wanted to share one of my top tips for Rent to Own with you today:

Avoid “Zero Down” Arrangements

If you are serious about getting into homeownership via rent to own but are living pay cheque to pay cheque, start saving for your down payment (initial deposit). You will improve your ability to succeed with rent to own if you come into the arrangement with a down payment. To get into a rent to own program, expect to come up with at least five percent of the selling price of the house you are interested in.

Some rent to own companies or private sellers may accept less, but be prepared to pay a higher monthly option premium in order to accumulate a sufficient down payment to qualify for your mortgage at the end of the rent to own term.

We cannot overestimate the importance of having an initial down payment.
In a rent to own, you typically do not need first and last month’s rent—just a down payment along with your first monthly payment when you get the keys.

Keep in mind that every rent to own company or independent seller will have their own requirements for when the down payment is due. For example, we do not collect any money from our homebuyers until the home inspection is completed. Be sure to ask when the down payment money is required, so that you can ensure that everything is in place on your end and things move along smoothly.

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