RTO Lender Informaiton
Lenders
Do you ever come in contact with that client that needs or wants housing right away, they have the money for their closing costs but, their credit is just not where it needs to be to get approved for a mortgage at this time? You may be able to refer these clients to this RTO program.
Benefits to the Lender:
· Still providing your services to your client, even though the mortgage was not approve at this time
· Refer your client to find housing before their mortgage is approved
· A way to staying in contact with your client by guiding them in the correct direction to get their credit where it needs to so they purchase their home.
Information about the RTO program
This program assists buyers that have minor challenges, which are holding them back from obtaining a mortgage to purchasing a home. While completing the rental process, the buyer will be responsible for improving their credit and staying in contact with their mortgage advisor/ lender on a regular basis to receive financial guidance when needed. The cost involved for the RTO program is very similar to the cost involved with purchasing a regular purchase.
Who will this program best benefit?
This is the ideal program for the buyer that is ready to become a homeowner but, there are some minor challenges that are keeping them from purchasing at this time. All challenges would need to be remedied within 2 years or less to have this program benefit them. Once all obstacles/ challenges have been remedied and the buyers have reached a position where they are able to purchase, then we move forward to settlement.
Home buying assistance programs
Most home buying programs will not benefit the buyer through the RTO program. The buyers are able to utilize these programs when they are ready to purchase if they qualify.
Benefits of RTO to the Buyer
The buyer gets to start living in the home they are going to one day own, while improving their credit, and saving money needed for closing costs. In addition, some of the monthly rent paid may be applied towards reducing the price of the house and/ or closing costs if rent payments are made on time.
Just think, potential buyers have to pay for housing somewhere so, why not have them put their rent money towards a place they are going to one day own?
**During the RTO program, RTO Buyer(s) are Tenant(s) and RTO Owner(s) are Landlords**
Property Maintenance and Repairs Tenant/ Buyers will be responsible for all property maintenance and repairs, including lawn care and snow removal. Housekeeping inspections will be completed by the property management company and/or Owner to ensure the property is being kept as agreed to, in the lease agreement.
Monthly RTO Payments
The RTO buyer will be required to make monthly RTO payments. When making RTO payments the buyer will be paying 1) rent, 2) saving money needed for closing costs, and 3) sharing the cost of account/ property management with the owner. Monthly RTO Payment Samples
***Estimates Only***
House Value-> 200K 150K 100K 85K 70K 55K
Rent Amt *1 1,975 1,503 1,017 883 750 615
RTO Savings *2 325 248 168 146 124 102
Acct Mgmt fee *3 79 60 41 36 30 25
Monthly RTO Pymt 2,379 1,811 1,226 1,065 904 742
Money Needed to Move-in Samples **Estimate Only**
(**Deposit Money, First Months Rent and RTO Expense Fees**)
The below examples of deposit money and monthly RTO payment amounts are based off of the value of the house.
House Value-> $200K $150K $100K $85K $70K $55K
Deposit Money *1 3,000 2,500 2,000 2,000 1,500 1,000
Monthly RTO Pymt 2,379 1,811 1,226 1,065 904 742
Program Exp. Fees *2 940 940 940 940 940 940
$ Required to move-in $6,319 $5,251 $4,166 $4,005 $3,344 $2,682
Note: To arrive at the total amount needed to move in to your RTO home, you will need to add $940 (Program Expense Fees) + Deposit Money + Monthly RTO Payment.
*1 Deposit Money- RTO Buyer(s) will be required to put a deposit down to start the program. This deposit money will be used as security deposit during the rental period and then will be transferred to closing cost money at settlement. If the tenant is not able to successfully complete the RTO program and purchase the property, the deposit money may be lost depending on the reason for the break in contract.
*2 RTO Program Expense Fees
Home Warranty $500
Renters Insurance $140
Agent House Finder Fee $100
Document Preparation Fee $200
Total $940
How will the Lender be involved with assisting the buyer through this program:
Do you ever come in contact with that client that needs or wants housing right away, they have the money for their closing costs but, their credit is just not where it needs to be to get approved for a mortgage at this time? You may be able to refer these clients to this RTO program.
Benefits to the Lender:
· Still providing your services to your client, even though the mortgage was not approve at this time
· Refer your client to find housing before their mortgage is approved
· A way to staying in contact with your client by guiding them in the correct direction to get their credit where it needs to so they purchase their home.
Information about the RTO program
This program assists buyers that have minor challenges, which are holding them back from obtaining a mortgage to purchasing a home. While completing the rental process, the buyer will be responsible for improving their credit and staying in contact with their mortgage advisor/ lender on a regular basis to receive financial guidance when needed. The cost involved for the RTO program is very similar to the cost involved with purchasing a regular purchase.
Who will this program best benefit?
This is the ideal program for the buyer that is ready to become a homeowner but, there are some minor challenges that are keeping them from purchasing at this time. All challenges would need to be remedied within 2 years or less to have this program benefit them. Once all obstacles/ challenges have been remedied and the buyers have reached a position where they are able to purchase, then we move forward to settlement.
Home buying assistance programs
Most home buying programs will not benefit the buyer through the RTO program. The buyers are able to utilize these programs when they are ready to purchase if they qualify.
Benefits of RTO to the Buyer
The buyer gets to start living in the home they are going to one day own, while improving their credit, and saving money needed for closing costs. In addition, some of the monthly rent paid may be applied towards reducing the price of the house and/ or closing costs if rent payments are made on time.
Just think, potential buyers have to pay for housing somewhere so, why not have them put their rent money towards a place they are going to one day own?
**During the RTO program, RTO Buyer(s) are Tenant(s) and RTO Owner(s) are Landlords**
Property Maintenance and Repairs Tenant/ Buyers will be responsible for all property maintenance and repairs, including lawn care and snow removal. Housekeeping inspections will be completed by the property management company and/or Owner to ensure the property is being kept as agreed to, in the lease agreement.
Monthly RTO Payments
The RTO buyer will be required to make monthly RTO payments. When making RTO payments the buyer will be paying 1) rent, 2) saving money needed for closing costs, and 3) sharing the cost of account/ property management with the owner. Monthly RTO Payment Samples
***Estimates Only***
House Value-> 200K 150K 100K 85K 70K 55K
Rent Amt *1 1,975 1,503 1,017 883 750 615
RTO Savings *2 325 248 168 146 124 102
Acct Mgmt fee *3 79 60 41 36 30 25
Monthly RTO Pymt 2,379 1,811 1,226 1,065 904 742
- Rent Amount – This is your monthly rent payment amount.
- RTO Savings – This money will be put in an escrow savings account. This money will be applied to the closing cost money you will need to pay at settlement. This may not cover all of your closing costs.
- Account Management Fee – This is a fee charged by the property management company for managing your account monthly, assuring you are on the path to complete the RTO program successfully, and answer any questions you may have through the process. Unless the Owner of the property elects otherwise, Premier Property Management (PPMG) will handle the property and account management; there is a monthly fee for these services. The RTO Buyer and Owner will be sharing this cost, unless another arrangement has been made between tenant and landlord.
Money Needed to Move-in Samples **Estimate Only**
(**Deposit Money, First Months Rent and RTO Expense Fees**)
The below examples of deposit money and monthly RTO payment amounts are based off of the value of the house.
House Value-> $200K $150K $100K $85K $70K $55K
Deposit Money *1 3,000 2,500 2,000 2,000 1,500 1,000
Monthly RTO Pymt 2,379 1,811 1,226 1,065 904 742
Program Exp. Fees *2 940 940 940 940 940 940
$ Required to move-in $6,319 $5,251 $4,166 $4,005 $3,344 $2,682
Note: To arrive at the total amount needed to move in to your RTO home, you will need to add $940 (Program Expense Fees) + Deposit Money + Monthly RTO Payment.
*1 Deposit Money- RTO Buyer(s) will be required to put a deposit down to start the program. This deposit money will be used as security deposit during the rental period and then will be transferred to closing cost money at settlement. If the tenant is not able to successfully complete the RTO program and purchase the property, the deposit money may be lost depending on the reason for the break in contract.
*2 RTO Program Expense Fees
Home Warranty $500
Renters Insurance $140
Agent House Finder Fee $100
Document Preparation Fee $200
Total $940
How will the Lender be involved with assisting the buyer through this program:
- You will need to process a credit application to for a mortgage to see if the buyer qualifies to purchase now. If not, then determine if it is possible for them to repair their credit within 2 yrs.
- Answer any questions the buyer my have regarding financing
- When comparing their income to their debts, you would need to advise the buyer what month mortgage payment range they are eligible for (purchase price range).
- You would then advise me if their credit is repairable within 2 yrs and what their spending range is.
- Review their credit with them and discuss what’s needed from them to start the credit improving process.
- Be there when needed for questions from me or the buyer for credit improving.
- Pull periodic credit reports to make sure the buyer are moving in the correct direction.
- Once the buyer has improved their credit enough to purchase the home you would be the lender assisting them with obtaining a mortgage.