A new rent-to-own mortgage product targets renters, applying a portion of their home value's appreciation during their tenancy toward reducing their down payment.
Offered by rent-to-own company Home Partners of America, the new loans will be backed by mortgage company Fannie Mae. Realtor.com reports that to qualify, tenants must have paid their rent on time for two consecutive years, and be first-time homebuyers. Similarly, in Lennar Homes' pilot program, the home builder will pay off some student loan debt of a borrower who purchases one of their homes.
Home Partners, which was started about five years ago and has purchased nearly 8,000 homes in more than 50 metropolitan areas, plans to offer the product to current tenants and those who sign a lease over the next two years, the duration of the pilot program. The company won’t make the loans itself, but is working with New Penn Financial, a Pennsylvania-based lender.
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