Are you someone who has always dreamed of owning a home, but isn’t quite ready to take the plunge into full homeownership yet? A Rent with an Option to Buy program may be for you. Home Partners of America can help you rent with resident flexibility and an option to buy. Learn more about this innovative home buying solution so you can be one step closer to achieving the dream of homeownership!
Introduction to the Benefits of Lease-to-Own Homes
With Home Partners of America you have more options when it comes to selecting a home. You can search for homes for sale in your desired area and find one that fits all your needs. Home Partners of America offers lease with the right to purchase options, which allow you to rent a home with the option to purchase the property at any point during the lease period. This is a great alternative to traditional renting for those who may not yet be able to purchase a home due to financial constraints, but still desire the benefits of homeownership. With this program, you have time to save up and build credit while living in the home of your dreams and knowing that you have the option to own it down the road.
Overview of Choice, Options, and Confidence with Lease with the Right to Purchase Homes
Lease with the right to purchase agreements with Home Partners of America outlines the rent and home purchase options for the next 5 years so there are no surprises or unexpected rent increases. The Home Partners of America program gives people more choices when it comes to deciding how they want to approach homeownership, and it also gives them options if things don’t work out as planned. If they can decide not to purchase the home and instead just walk away at the end of the lease. This allows peace of mind knowing that there’s no risk involved in trying out this method before fully committing.
How Does Home Partners of America Work
Home Partners of America offers households the advantage of renting a single-family home now and deciding later if they want to purchase it. With HPA, you get clear options with open visibility into the rental and purchase prices for up to five years prior to agreeing on anything – simply choose from homes available for sale, commit only to a one-year lease along with an ordinary rental deposit, buy anytime without obligation or penalty should you decide against buying – all while feeling confident in your decision! Home Partners of America makes the home-buying process seamless, relieving you of any tedious negotiations, inspections or paperwork. Not only that; they provide a move-in ready house complete with all preparation necessary to ensure an enjoyable transition into your new abode!
See if You Qualify for Home Partners of America Lease with the Right to Purchase Program
Home Partners of America meticulously reviews each application based on several criteria, including income and rent-to-income/debt ratio; TransUnion Classic 08 FICO® scores; housing history; as well as criminal record.
If you’d like to submit an application, make sure that your criteria meet the following requirements:
– An annual household income of at least $40K and verified.
– A FICO score of no less than 620 (typically)
– No open Chapter 7 Bankruptcy filings on your record.
– No criminal history that would disqualify you from applying.
To begin the application process, please provide essential information for all of those residing in your home, including minors and people without income. In addition to that, if you have any pets or assistance animals living with you as well, kindly input their details too. Unfortunately HPA cannot accept cosigners – each household must possess a least one person with either a SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) along with an established credit record. Those who are more than 18 years old will be subjected to a thorough background check and credit assessment.
To successfully proceed with the application process, income verification is necessary. You’ll be asked to upload relevant documents (in PDF format or using Plaid) for anyone who contributes to rent from your household. This information will then be used to calculate a maximum monthly rent amount that you are eligible for. Usually within 1-3 business days, HPA can make a decision and inform you how much of a rental budget you have available – giving you access to search for homes accordingly! The cost of an application is approximately $35 per person.
Searching for Homes for Lease with the Right to Purchase
When your application is approved and you have a rental budget allocated, it’s time to start searching for the perfect home. Home Partners of America strongly recommend that you work with an experienced realtor who can guide you through the process and inform you if a certain property qualifies for their Lease with Right to Purchase program.
If you’re looking to join our program, your home must meet a few criteria: it needs to be situated in an approved community; it can either be a single-family house or fee-simple townhome, and it has to be priced below $650,000 for the Northern CO and Denver Metro area. Additionally, these homes should feature at least two above grade bedrooms on lots no larger than two acres!
Any new construction homes must be fully finished with central A/C prior to submission, regardless of their location. Furthermore, any new subdivisions or phases of an existing subdivision should ideally reach a completion rate of at least 50%. It is essential that the builder uses solely the standard state contract and avoids making modifications through added addenda.
The Lease with the Right to Purchase Program restricts properties older than 100 years, located in non-approved communities or on 2+ acres of land that have a septic tank or well. Additionally, homes with oil/propane tanks as their primary heating source, converted garages/guest houses/in-law suites situated away from the main building and solar panels leased by homeowners are ineligible for this program. Other restrictions may apply.
Steps to Secure a Home with Home Partners of America
If you’ve found a home that suits your needs, Home Partners of America will take a look at the property for approval. Upon acceptance, you’ll be presented with Anticipated Terms which detail rent and Right to Purchase prices throughout each year. After signing these terms and sending them back to HPA, Your agent, in partnership with Home Partners of America, will manage all steps required to secure the home from the seller.
If the seller accepts the offer with Home Partners of America and the home goes under contract, a security deposit and a signed lease are due within two business days. Failure to do so results in HPA terminating the contract and disqualifies you from the Program. Typically the amount of the deposit is equal to 2 months of rent. If the offer is rejected, you may resume the home search
All prospective residents must view the inside of the home in person before Home Partners of America will make an offer.
Lease and Purchase Cost with Home Partners of America
When you lease a home with Home Partners of America’s Lease with the Right to Purchase program, your rent will always be secure. Your annual rental rate is fixed and increases by no more than 3.75% from one year to the next, so you can confidently plan for what lies ahead without any unexpected changes in cost.
For instance, if the rent for Year 1 is $1,400, then it will increase in Year 2 by a modest sum of $50 per month (1400×1.0375). The rent should be rounded down to the nearest ten dollars.
By signing a lease agreement, you’re committing to one full year of tenancy. Fortunately, there’s no penalty for not renewing; however, it is mandatory that you provide 60 days notification prior to the expiration date.
The cost of the house is determined by considering several factors, including the purchase price, closing costs, HOA Transfer Fee (if any), Make-Ready expenses and “Owner Work”. All these are compounded to obtain a total cost which will in turn decide the Right to Purchase prices.
For example of calculating the total/acquisition cost of a property:
Purchase Price $200,000
Closing Cost $3,000
Make-Ready & “Owner Work” $7,000
Total Cost. $210,000
During your lease period, you are eligible to purchase the property at any time as long as we have a 30-day notice before your lease ends. The RTP price rises each year by 3%-5.5%, depending on location. For instance, if the Total Cost is $210,000 and there’s a 5% increase in RTP prices then the following will be true for years 1 – 5:
Right to Purchase Price Schedule
Year 1 $220,500
Year 2 $231,500
Year 3 $243,100
Year 4 $255,300
Year 5 $268,000
In order to exercise your Right to Purchase, you will need to pay for transfer taxes, title insurance and the cost of a mortgage loan. These standard closing costs may fluctuate depending on the maintenance allowance utilized during the duration of your lease period.
As a resident already living in the residence, exercising your Right to Purchase is hassle-free – giving you assurance in the financial commitment of homeownership. Written notice must be presented at least 30 days prior to when your lease comes to an end. Signing a legal contract and paying $1,000 Earnest Money will also be necessary. In case you make up your mind not purchase the home, there won’t be any penalty or consequences whatsoever.
Home Partners of America does not provide financing. Thus, prospective home buyers must secure a lender to finance their purchase at the previously established price.
One of the biggest questions people have about this program is what happens if real estate prices change more or less than 3-5%. That’s arguably the best part: no matter how much home values increase or decrease, you’re still locked in to pay the purchase price outlined in the program’s terms. Furthermore, you can always opt out and buy another property at a better price if market values decline – essentially providing an abundance of opportunities for buyers!
Other Possible Cost and Features of the Lease with the Right to Purchase Program
When moving into a used home there can be items such as paint and carpet that need to be addressed prior to moving into the home. If the perspective resident would like to request paint or new carpets this needs to be done during the property submission process. Certain appliances can also be requested such as a refrigerator or stove.
If a household would like new paint in the home home, HPA offers two color options: neutral beige and gray. Households can request the entire interior or only a few selected rooms (walls only). However, should the existing wall paint appear in good condition, it will not be painted over.
If a household would like to install carpet, it will be a neutral color. Homeowners may choose to have all rooms of the house covered or just a few special areas – however, existing carpeting that is in good condition will not be replaced.
HPA does not supply or maintain clothes washers and dryers for households. Homeowners may ask the seller include them in the home as part of the home sale, or alternatively households can bring their own. If a seller agrees to leave washer/dryer when selling property, these must stay in the home if that household moves out.
When it comes to refrigerators, a household has an array of options. Bringing their own is always a possibility, but if they don’t have one readily available, then the seller may leave theirs in the home. Alternatively, Home Purchase Assistance (HPA) can provide you with one should it be necessary and requested–just keep in mind that there will be an additional $1800 cost added to your purchase price when choosing this option.
Resident requests that meet Home Partners of America’s approval regulations will be added to the Right to Purchase price, labeled as “Resident Property Requests,” and documented in the lease. Furthermore, HPA reserves the right to decline any requests and won’t substitute appliances that are functioning properly.
Additional Monthly Fees When Leasing a Home with Home Partners of America
Households are allowed up to three cats or dogs not weighing more than 180 pounds combined. No dog breeds restrictions will be imposed by HPA; however local regulations and/or Homeowners Association rules may apply. A $300 pet fee will be charged as well as an additional charge of $30 per month for each pet (*fees can vary depending on the market).
Home Partners of America requires tenants to have liability coverage for any possible property damage during the lease period. They can either choose our own liability program in which they pay only a $13 monthly fee, billed through their Resident Portal, or find coverage from an external provider. It is essential to note that Liability insurance and Renters insurance are two different types of protection.
To ensure the best indoor air quality and to keep your HVAC running smoothly, Second Nature provides air filters for a low cost of only $15 per month. Residents are billed each month and the filters arrive in the mail.
Conclusion and How to Get Started
If you want to explore the Home Partner’s Lease with the Right to Purchase Program you can apply here. Working with an experienced realtor such as Amy Kilcoyne, can keep you on track and make sure you are viewing homes that qualify for the program. If you have any questions about the Lease with the Right to Purchase program please email Amy.