Home Rent to Own | Power of Sale/Foreclosure | Credit Management Do You Want To Become A New Homeowner Or Stop Fore | Page 3

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 don’t 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.