Human[kind]dwellings: Qualifying as a “rent-to-owner”

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There are several factors that help H[k]D understand your “fit” for our Dwellings product and communities.

• First, we vet you for the basics:  Income, Rent History, Criminal Record, and Proof of Bank Balance.
• Second, we ensure that it’s the household’s total income that meets our target range.  Our policy is that everyone over 18 living in our Dwellings homes must be on the lease, and must qualify … which means disclosing income.
• Lastly, when looking at a pile of applicants, we review occupation and consider the community impacts in the event of emergencies or unforeseen disasters (Pandemics, Fires, etc.). We will work with your local municipality to get thier definition of “essential workers” and use that as our guide.

Understanding the ways your monthly rent contributes to your long-term ability to build personal wealth is critical.  Our rent-to-own products have one target objective:  Sell and transfer the ownership to the financially ready resident as soon as possible.  Here’s how it’s done:

• First:  We establish a strong relationship with a local community bank for our construction and long-term debt that allows us to offer this program.  
• Then, establish an escrow account where your money will grow, be invested according to your risk tolerance (aggressive or conservative), and compound interest.
• As part of an approved application, you will choose how much you will add to your base rent. You may also elect to deposit any savings you have which wold allow your downpayment to grow as one lump sum.
• Our guidance is to suggest a monthly savings amoiunt and an investment risk-tolerance combination that will keep the time you’re renting to less than 6 years.
• Lastly, the community lender who enabled this development will give you the most favorable rates they have available … the Federal Marketplace for first-time-buyers is also a great path to a less-expensive mortgage.  Ultimately it’s your choice how and when you obtain your financing for the home.

Financial strength is an elusive end-state.  Even for those with privilege, getting credit scores to what is considered suitable for a mortgage can be a wrought and hard-won process.  Here’s what we will do to make the financial journey to homeownership as predictable as possible:

• We will recommend that you subscribe to, and regularly reference, a credit score monitoring service.  Improving anything requires visibility and the ability to measure progress.
• We will partner with our investment advisors to give you the tools to watch your downpayment add up, both from your monthly payments and the compounding interest your account will generate.
• We will partner with our local community bank to offer terms and acceptance criteria for our future homeowners‘ mortgages that considers your years of perfect payments and the steadily growing credit scores you've cultivated.

Life happens.  Maybe you need to move out of the state to take care of a family member.  Maybe your financial circumstance doesn’t allow you to continue with payments and you need to downsize.  Or as much as you committed to our community and the Portland, Oregon area when you moved in, your desires have changed vis a vis where you want to grow your lives.  Regardless of the circumstance, ere’s how we will handle these conditions:

• If H[k]D has another Dwellings property in your target area (that meets your new circumstance), we will work with you to find an available home and transfer the  benefits that you’ve saved.  Because these are new homes, we will subtract a reconditioning fee from your invested savings’ proceeds to fund the renewal of the home for the next resident. 
• If finding another Dwellings home is not in the cards, H[k]D will take a percentage of your investment proceeds in exchange for cancelling your Lease Contract arrangement with us.  The percentage we assume will be clear to residents in this case at the time we execute our contract.

Are you ready for your purchase?  Well, that’s not a simple answer without more information.  The amount of your downpayment which qualifies you for a mortgage can be a moving target. That said, by the time you are ready to pull the homowner trigger, you’ll have options … each with their strengths/weaknesses.  Which you qualify for and how they differ will be your decision-making factors.  Here are the options that will be available to you when the time comes:

• Conventional Banks: The big banks offer mortgages, and compete for customers by offering favorable rates and terms for mortgages.  It never hurts to look at these options.
• Community Banks and Credit Unions: We will establish a local community-purposed bank for our construction and long-term debt so we can offer these homes to you.  Community banks and credit unions can often offer favorable rates and terms, and they do because they care about developing community.
• Local and Federal Programs:  There are programs offered to first-time-buyers that require a smaller downpayment and terms banks cannot meet.  Further, programs exist for under-represented groups that can stack benefits on top of municipal or federal offerings.