For young people just entering the Toronto housing market the prospect of financing the purchase of their first home can seem daunting. Most young professionals are just starting out in their careers and don't have much money saved towards purchasing a home. Because of this they believe that renting is their only option for the next several years until they can squirrel away some savings. Then they have to hope that their credit and employment history will qualify them for a "traditional" mortgage loan. However there is a way for someone who is young and beginning their career to start building equity in a home and at the same time put money away for the eventual purchase of it. This financing technique is known as a lease-option.
In a lease-option, you find a property that you wish to buy. It doesn't matter if you can't afford ฝากขายคอนโด to buy it now or get qualified for a mortgage. You are going to lease-option it, which is also known as rent to own. In this scenario you and the seller agree on a price you will pay for the property when you do purchase it at a future date. It can be anywhere from one to three years from now, or more, whatever time period is acceptable to both yourself and the seller. You then enter in a contract with the seller which gives you the right and option to purchase the property at that time and for that price.
Now you may be asking yourself what good does this do me? I still am paying rent for that length of time and getting nothing back in return and I still need to qualify for a home purchase to buy it. Why would I agree to this? The answer is equity buildup. In a lease-option scenario the seller agrees to credit part of your monthly rental payments towards your purchase price of the home. This again can be any amount both parties agree to. So say for instance your monthly rent is $1,500. You may enter into a contract with the seller where $250 of that amount is credited towards your purchase. So long as you buy the house at the end of the lease-option you will get that money deducted from the price of the house.
Another benefit of a lease-option is the amount of money you would normally put down for first months rent, last months rent, and a security deposit becomes part of your down payment on the home. In this same example let's say a rental wants first and last month's rent and a security deposit of $1,000. This comes to $4,000 cash you would need to move into the property and that money is basically gone. (Yes you may get your security deposit back at a future date but more than likely you will get less than the whole amount and during the term of the rental that money is unavailable to you and not benefiting you in any way.) Now let's say you enter into a lease-option. The seller may want $5,000 down as an option payment. This money will however will be credited back to you when you buy the house. So while you may have to put some extra money down initially, it will all come back to you at the closing.
But the best part about buying using a lease-option is the type of financing you can apply for when it comes time to purchase the house. Most lending guidelines for Canadian banks state that so long as you have lease-optioned the home for at least twelve months then when it comes time to buy the home it is considered a refinance transaction and not a purchase transaction. Refinance loans are easier to qualify for since they require less paperwork and also allow you to borrow larger loan amounts against the value of the house. They also will use the current market value of the house to determine how much you can borrow if it is higher than the agreed upon lease-option price.
So let's say you were to rent an apartment for $1,500 a month for three years. You put down $4,000 when signing the rental agreement. You then spend $51,000 over the next three years to occupy the property and when it's over you walk out with your $1,000 security deposit back and nothing else. You still need to save up for a down payment on the home plus closing costs.
Now let's put those figures into a lease-option. In this case you find a home you wish to buy. The seller agrees to sell it to you in three years for $150,000. You agree to give him $5,000 down and then $1,500 a month, $250 of which will be credited to you at the time of your purchase. When the three years is up you now have a total of $14,000 towards your purchase of the home which means you only owe the seller $136,000. Let's say you find a lender who is willing to loan you 90% of the value of the house. The house has risen slightly in value and is now appraised at $165,000. The lender therefore will loan you $148,500 as a refinance. This is $12,500 more than what you need to buy the house. That money can be put towards your closing costs and you have now purchased the home with no money out of your pocket at closing.
ไม่มีความคิดเห็น:
แสดงความคิดเห็น