RTS Mortgage Financial

As the goal of homeownership seems increasingly out of reach for many aspiring homeowners, individuals are exploring alternative methods that can help bridge the gap to homeownership. Here are two non-traditional options that might pave the way to owning your home.

The Shared Appreciation Program

This program helps prospective homeowners enter the market by providing down payment assistance, which is registered against the property as a second mortgage. You do not have to make any payments on the second mortgage or repay it unless you sell the property. This assistance brings the down payment to 20%, which also offers more flexibility with financial ratios. This product is similar to the now-defunct government first-time homebuyers down payment program. To learn more about this product, listen to the Shared Appreciation segment on the Positioning Stage podcast.

The Rent-to-Own Program

The rent-to-own program offers another non-traditional way to purchase a home. In this arrangement, you rent from an investor for about 3 to 5 years, after which the mortgage is transferred into the renter’s name. This program allows the client to improve their credit, perhaps save a bit more for a down payment, and better position themselves. This strategy secures a property and works towards ownership goals instead of waiting and risking price increases that could push them out of the market. At the end of the term, the client is given a buyout value; often, the property value is actually more than the buyout value, creating a win-win situation for both the investor and the potential homeowner.

There are plenty of rent-to-own options out there, but it’s crucial to do your research to ensure you are working with a reputable company or individual. Typically, at least 5% down is required, and over the course of the term, a portion of each monthly payment is set aside for the final down payment when the property is transferred from the investor’s name to the home buyer’s name. An exit plan is key to ensuring that the buyer can qualify for a mortgage at the end of the term. Some rent-to-own programs include a debt program to ensure debts are paid off by the time the property is ready to be purchased in the client’s name.

To find out more about positioning yourself for a home purchase through the non-traditional rent-to-own method, check out the Positioning Stage podcast.

While these are viable non-traditional options, they might not be suitable for everyone. It is extremely important to conduct thorough due diligence and research any mortgage product to ensure it is the right fit. If you are interested in any of these options or have more questions, please reach out.