In part 1 we talked about some of the basics of the program and some of the qualifications.
In part 2 we’ll go through a scenario from start to finish to give you a better idea when using this new innovative way to finance a home.
Let’s say you’ve already qualified for the program, which qualifies you to finance a home through them in the future.
The company will tell me what your monthly lease amount is and what your purchase price will be.
Once the company tells me what purchase price you qualify for, you and I will discuss what you’re looking for in a home and I’ll search for homes that will match your criteria, while keeping the company’s criteria in mind at the same time.
Once I have a list of homes for us to view, then you and I will go out and view those homes.
If you find one that you want to move forward with, then I will make an offer on that home with the company being the buyer.
If our offer is accepted, then the process begins.
While I deal with the company throughout the transaction, you and I won’t be doing much together. You’ll be working mostly with the company to finalize your lease-to-own paperwork, which includes sending your 1st and last deposit to the company.
We will meet during the first week after acceptance of offer - mainly to go through the inspection.
The paperwork you’ll be working on with the company involves your lease contract, which involves you potentially buying the home from them through their mortgage company.
As I mentioned in part 1, the company uses an FHA loan to purchase the home because the loan is assumable. When you are ready to finance a home and “buy” the home you’re leasing from them, you have a choice of either assuming the loan from them or you get your own financing.
Either way, you can use the potential increase in equity towards your down payment and closing costs.
If there is no equity, then you don’t have to buy the home, unless you’ve saved enough for the down payment and closing costs. Your obligation is always just the lease term. You are never obligated to buy the home, but the company’s goal is always to sell you the home, because they’re not in the business of renting homes.
If you don’t buy the home, however, you won’t have access to the increased in equity.
There are some costs that you pay, but keep in mind, that part of the offer we make to the seller is they have to assist you towards your closing costs, which is 3% of the accepted price. Most of the time this amount is above what you need, so the company will apply the overages towards your file, which is good for you.
When the offer is accepted, these are at your costs:
I recommend that you attend the home inspection. The inspector will go through the home and go over the plumbing, electrical, appliances, crawl space, sprinklers, attic, HVAC, among others.
It typically takes 2.5 to 3.5 hours, depending on the size of the home.
You don’t have to be there the entire time, but be there once they’re done or towards the end. This way they can go over their findings with you and you can ask them any questions you may have about the property.
We should get a detailed copy of the report the next day and we’ll go over it together along with the company.
The seller will repair the findings from the termite report and the company will also ask some of the items in the home inspection that they think may need to be repaired.
The company knows it’s best that we don’t nickel and dime the seller for repairs. It’s best to ask for the major items or items that could be considered a health and safety issue. The little stuff will, most often than not, cause the transaction to go south and fall through.
The seller has the right to decide to do or not do the repairs that we ask for, which means the transaction could fall through and we’ll have to find another home.
Unfortunately, sometimes the property looks a lot better than its actual condition. That’s why we always do inspections.
Always, Always, Always do a home, termite and roof inspections. ALWAYS!
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The seller typically decides not to move forward if the report shows there are a lot more items to be repaired than what the seller expected.
If both parties do agree on the repairs, then we move forward.
At this point, we won’t be meeting any more until we close, which is when I give you the keys to the home.
However, I will give you weekly updates throughout the transaction to keep you in the loop.
On the transaction side, I’ll continue working with the company to close the transaction.
Using this program is like having the best of both the rental and the buyer/owner worlds. You rent, but have the ability to gain equity as if you’re the actual owner of the home.
These are the basics of this new and innovative way to finance a home program.
It is a great way to get into a home now, lock in the low rates and benefit on the rising housing market while still renting.
What could be better?
Call me to go over this program in more detail and take advantage of this great opportunity to get into the game of home ownership.