Why Choose HPS? HOME PURCHASE SOLUTION! A modern approach to Rent to Own

Let’s work together, using our Family First Strategy, and help you more easily achieve home ownership and stop renting. Together we will design a solution suited to your particular circumstances.

SO, HOW DOES THIS ACTUALLY WORK?

  • The preliminary application form will quickly provide us with sufficient information about your income, your credit situation, and your home expectations. Neither of us wants to waste a lot of time and effort unless we can quickly determine how you could qualify for our program.
  • Once we have evaluated your initial application, and determine we have a solution that meets your needs, we will ask you to complete a much more detailed application. We will be asking you to provide letters of employment, notices of income tax assessments (2 years), credit reports, and so on; this will allow us to be certain we can be of help. There is a $150.00 application fee which, upon your acceptance into our program, will become part of your initial deposit.
  • We thoroughly screen you and your information to ensure you can meet the financial commitments you make – Grand River is investing is investing a lot of effort in your success, therefore we are very selective in our acceptance. Our selection criteria are tougher than those of the banks, but that is to your advantage!
  • Together, we determine how much you can afford to pay for a home that meets your needs, in a location you select. We then estimate your deposit, or “down payment” and what your monthly housing costs are expected to be.
  • We pride ourselves on working with you to establish specifically what steps you will have to take to ensure you qualify for conventional mortgage financing at the end of term – we frequently set up a credit improvement program to that end.
  • When you qualify for our program, and you totally agree, you are then asked to advance 50% of the down payment prior to start searching for your home.
  • Once you have chosen a home you can afford, in the location you want, the balance of the down payment is due and an offer is made on the home you have selected.

Let’s take a little break here and talk about the down payment! When you want to buy a home, one of the key conditions is having a down payment – under most circumstances… the least amount is 5% of the purchase price – for your benefit, we look for a similar amount. (In exceptional circumstances, we will accept a minimum of 3%, however the monthly payments will be increased so as to equal the same outcome at end of term, just as if 5% had been made.)

  • When the offer to purchase the home has been accepted by the vendor, and all the conditions have been met, including a detailed home inspection for which you pay – this will be your home – Grand River then buys the home on your behalf.
  • Simultaneous to vendor acceptance, Grand River “sells” you the home – you execute a purchase agreement which includes the price of the home at end of term, at which point you will have qualified for conventional mortgage financing.  This purchase price factors in all the costs that Grand River had to meet when the home is bought i.e. how much was paid, the transfer taxes, as well as legal costs and other disbursements. This end of term price also provides for an annual escalation factor which is normally lower than the historical annual increases in home prices in the area you have selected.
  • Essentially at this point, you have bought the house from Grand River, you just are not on title until all the conditions of the purchase agreement have been met. The down payment is deducted from the selling price, and the balance due to Grand River (which is now your lender) is treated just like a regular mortgage where your monthly payments cover principal and interest, with amortization usually set at 25 years.
  • Another part of the purchase agreement requires that, just like any other homeowner, you are responsible for property taxes, insurance, and all maintenance. In addition, there is a monthly management fee since Grand River, being on title, has to advance and pay the taxes and insurance premiums on your behalf, as well as working with you on your credit improvement program.
  • Once you have paid the first month’s housing costs, you are ready to move into your new home.
  • Throughout the term, subject to Grand River approval, you are free to make any improvements to upgrade or enhance your home. As previously indicated, you are responsible for all maintenance – this is not a rental, it is your home.
  • We work with you, at least on a quarterly basis, to make sure you are on track with your credit improvement targets – this will allow you to qualify for conventional financing at the end of the term once you have fulfilled the all the conditions of your purchase agreement.
  • At the end of term, the balance due to Grand River is usually less than the cost of the home at the beginning of the program. Your purchase agreement provides the lender you choose with evidence that sufficient equity has been accumulated to advance you with the funds needed to pay off Grand River and cover closing costs.
  • Transfer of property title to you is effected immediately the balance due to Grand River has been covered by the mortgage you have secured on your property.

THE ADVANTAGES

  • You immediately “buy” the home you have selected – you are simply not on title until all purchase conditions have been met.
  • You build equity in the home as you meet your monthly payments to Grand River.
  • You can make approved improvements – it is your home.
  • You qualify for conventional financing and the equity built up means your mortgage will cover Grand River’s balance and your closing costs.
  • Your not locked-in to the full term of the agreement and may have the option to purchase at any time.

HOW DO I GET STARTED?

Our approach to home ownership involves four steps:

  • A preliminary application to quickly determine if we can jointly address your challenge.
  • A formal application that provides all the information required to establish your ability to qualify for our solution. (There is a fee that will be refunded or applied to your deposit)
  • When you are accepted, you will need to provide 50% of your deposit before you begin a home search, with the balance due before an offer is made.
  • Once the home is found, Grand River buys it on your behalf, and we immediately sell it back to you; you gain title when you have fulfilled the purchase agreement conditions.

FREQUENTLY ASKED QUESTIONS

  • Why are there two application forms? The first one is less detailed and will quickly ensure neither of us wastes our time.
  • Why do I have to pay a $150. application fee? Grand River needs to expend time, effort, and pay for services to qualify you for the program. Should you change your mind within 48 hours of applying, the fee will be refunded.

If you are accepted in the program this amount will form part of your deposit. (However, should your application omit important information, or contain errors, or misrepresentations, the fee may be forfeit and your application rejected.)

  • How do you determine how much we can afford to pay for a home? The typical rule of thumb is you can afford to buy a home that is in the range of 3 to 3.5 times your annual income; for example if your annual gross income is $80,000., you can probably look for a home worth between $240,000. and $280,000.
  • You indicate your qualification criteria are tougher than banks, what does that mean?Typically, banks will qualify people with a good credit score providing their housing costs (mortgage payments, property taxes and heating costs) do not exceed 32% of gross income. Using the above example, if you earn $80,000. you should be able to carry monthly housing costs of about $2,135. – Grand River uses a 30% factor, which would translate to $2,000. per month. (If you have other major debts, your housing costs and other debt payments should not exceed 40% of gross income – in this case the banks would set the limit at $2,665./month – Grand River would set it at $2,535.)
  • In that case, what would be the amount of deposit? You could put any amount greater than 5% of that cost, or about $13,900. At that price, that would be your minimum 5% down payment if you qualified for a conventional mortgage.
  • Carrying on with this example, what would be my monthly payments? Based on a selling price of $278,600., with a $13,900. down payment, you would pay Grand River $1,746. per month, not including property taxes, insurance. At the end of three years you would owe Grand River $250,160 – less than the total cost when the home was acquired!
  • What happens if I am late or miss a payment? Just like most rental, lease, or mortgage agreements, there is a penalty specified in your purchase agreement. If this is repeated, you would be in default and could be evicted.
  • What if I don’t qualify for conventional mortgage financing at end of term? A very good question! We would have to deal with it when that occurs and mutually agree on how to address this situation – perhaps we would have to negotiate a new purchase agreement, extend your term, or other solution; each case is potentially different. The same would apply if, for some reason, your mortgage lender will not advance sufficient funds to pay Grand River what is owed and closing costs.

Why Choose Us?

  • We develop ethical and transparent relationships with our colleagues.
  • Implement a proven system that will continuously provide sound, predictable, winning results.
  • Commit to rigorous screening and due diligence practices to ensure successful outcomes.
  • Remain accessible and responsive to our clients.
  • Developing and nurturing loyal relationships with our partners.

Get connected!

Discover the benefits of our Home Purchase Solution.

RTONEWSLETTERRTOGETSTARTED