The Best Win-Win Options To Have A Home In Canada

1. The Best Win-Win Options To Have A Home In Canada

2. Synopsis • Looking To Buy Your Forever Home? This Might Be For You • Rent-To-Own: What Can It Mean For You • Credit Management: How To Borrow Responsibly • Why Credit Management Is Important For Businesses • Power of Sales, Foreclosure: What’s the Difference and What’s Better for You

3. Looking To Buy Your Forever Home? This Might Be For You • ‘Rent to own’ concept is as simple as 1-2-3: you rent the desired property and legally become a tenant and at the end of your tenancy you own the place – assuming you have paid the predetermined sale price by the end of the agreed date. Another option includes finding a third party which can buy the place you want and then rent it to you for a fixed period of time, during which you pay rent and an additional agreed percentage which goes towards the down payment of the property. • Let’s say for example, the current market rent for your desired house is $1500. After establishing this, you and the owner agree that the amount that will be paid each month is $2000, the breakdown is as follows: $1500 will go towards the rent, thus the owner and the extra $500 will be deducted from the overall price of the house until the purchase price is paid in full. It is mandatory that both this price and the terms are decided and agreed upon during negotiations, prior to moving in.

4. Looking To Buy Your Forever Home? This Might Be For You • The good and the bad • Your credit score does not matter as much as it would if you would apply for a mortgage. It also allows you the benefit of building up your scores and at the end of the tenancy, you might even be eligible for a loan while also having paid most of the down payment. There is also the benefit of trying out the home before deciding if it is a good fit. This way, you can experience firsthand if there are any issues with property, if the neighbourhood is to your liking or just change your mind due to unexpected circumstances. • There are some potential downsides as well. Probably the biggest risk is that the money you pay on top of the rent is non-refundable. Should the deal fall for any sort of reason, such as a decrease in value, you will lose the entire amount that has been put towards the down payment. Moreover, it is utterly important that you read and understand all contract terms so that you do not end up paying more or even worse, lose the ability to purchase the property. Some contracts specifically state that in the case of missed or delayed payments – that is on top of the rent, buyers can lose the right to purchase and the amount paid towards the down payment up to that specific date.

5. Rent-To-Own: What Can It Mean For You • Your usual arrangement is put in place between the owner of the property and the tenant involving an agreement from both sides on a set price and the period of time it would take the second party to cover the amount, generally starting from 2 years onwards. It is easier to picture it as a mortgage, without involving banks or outrageous, unexpected fees at the end of the contract. • As nothing is a simple as it sounds, there are a couple of aspects one should be aware of before binding themselves to such a contract. To be on the safe side, specialists recommend having two contracts put in place – a regular lease/tenancy one and a purchasing one. There is a common misconception that the seller will set aside a specific amount from the rent as the monthly down payment, but as it happens, it’s not usually the case. The additional amount will have to be paid on top of the rent and be highlighted as appropriate to avoid any unforeseen issues in the future.

6. Credit Management: How To Borrow Responsibly • It should not come as a surprise that any loan you may access comes with an interest which will have to be paid in full as well as the amount borrowed. As a general rule of thumb, the more money you borrow, the more you will have to pay back. There are also two types of interest you may find yourself faced with. One would be fixed which means it does not change over time and a variable one which as the name suggest can either increase or decrease throughout the loan period. • One should always remember also that there are many different types of credits that are suitable for many different situations. If you are looking for a short term loan to pay off some minor things a credit card might be the best option. • There may also be the case that you have a poor credit record which means it is increasingly harder to access a loan, even for a low amount. In these situations, you could take into consideration an option called ‘bad credit’ loan. It may sound like an escape door, but it usually means the interest is higher and if it happens to miss a payment, it will affect your credit scores even more. However, desperate times call for desperate measures and if you find yourself in a desperate situation, the upside is that you will actually be able to resolve your financial situation, but in the long term you will need to build your credit back up.

7. Why Credit Management Is Important For Businesses • Get all the information you can on the customer • When a potential new client approaches a company with a request, the very first step one should take is researching their background as much as possible. This does not only mean a swift Google search, but thorough online research using social media and other tools. Some businesses even go as far as to ask for job-related contacts or a guarantor to make sure they do not end up losing more than they are gaining. Depending on what service/product the potential customer wants to access, it might be a good idea to set up an in person meeting to discuss details and get a better grip of their personality. • Credit checks are a must • The second step is mandatory. As a company in a position to provide a service or a product you want to make sure your back is covered and the chances to lose revenue are minimal. It is important to know that in Canada there are two major consumer credit rating bodies: Equifax and TransUnion.

8. Why Credit Management Is Important For Businesses • By working with them, you will be able to access the credit history of a specific person. This can mean anything from outstanding balances, credit card usage, mortgages payment, any unpaid fines or fees, and more. This is roughly how a credit score is calculated. Obviously, at the end of the check you will receive a report that will help weigh in the pros and the cons and help you make an informed decision. • Put a deposit program in place and insure your deliverables • Last but not least, nothing in life is 100% sure, so you might not want to put all your eggs in one basket. Asking for a deposit – an amount that is not overwhelming that it scares customers away, but something decent enough to give you a confidence boost, is utterly important. Should anything go wrong, at least you have a safety net to fall on. Similarly, insurance policies should be an integral part of the credit management process.

9. Power of Sales, Foreclosure: What’s the Difference and What’s Better for You • A foreclosed property or sold through the power of sales means that the party who lends, usually a bank, also known as the mortgagee is selling the property, as opposed to the homeowner or mortgagor. It is how third lender parties go about to recover the amount of money lost when the mortgage was not paid. • Here is where things get a bit more complicated as there are huge differences between a foreclosure contract and a power of sale one. In the first scenario, let’s say for the sake of the situation the bank gets ownership of the property, which is then sold by a court, relieving the house owner of responsibilities.

10. Power of Sales, Foreclosure: What’s the Difference and What’s Better for You • In the second scenario, the homeowner remains involved until the sale is closed, the property is being handled by a real estate agency which facilitates the sale and they can be held responsible for any losses that occur during that sale. In each cases, the ownership party gets to keep all profits that may result after the sale. • What might this mean for the actual buyer? There are many risky situations and it is important to be aware of them so that they can be avoided or settled beforehand. As a potential buyer, there are a number of uncertainties that can arise and swiftly cause additional payments. Let’s say in the instance a bank is selling a house you are interested in, it is highly unlikely they have done a full review of the property’s condition and functionality. Should the buyer encounter issues such as mold or plumbing problems, it then becomes their responsibility to cover any associated repair costs. This is not exactly an ideal situation if your budget does not include money for damages.

11. The End For more details, please visit: https://homeownersoon.com/