Why Consider Rent To Own?
A lease purchase option is just another way for folks to begin the home ownership process. Its a great way for someone who is just shy of being able to qualify for a mortgage or for folks who are self employed and don’t have their business “seasoned” yet.
What About Rent To Own?
A Lease Purchase is an agreement between a landlord and tenant or a seller and a buyer where they agree “in writing” the tenant or buyer has an option to purchase the property in the future either at an agreed price or what a licensed appraiser feels the home is worth. The Lease Purchase has a time limit. The parties can agree for any length of the term but is usually between 12-24 months. This method could be good for first time buyers who have never bought anything on credit and therefore have no credit.
Normally, sellers will require a significant non-refundable deposit, the option. The buyer is actually paying for the option to buy the home at a pre-determined point in the future or anytime before. Whereas the agreement is 100% negotiable, a down payment may or may not be necessary. The deposit is a way for the buyer to “say” to the seller that he is serious about the lease purchase agreement. The deposit is also a way for the seller to gain commitment of the buyer who now has some skin in the game, so to speak. The deposit is usually considered a down payment and credited to the buyer at the time of closing on the sale.
What About A Home Inspection?
The lease option is just another way to purchase a home so all the things that would normally be done by the buyers is the same. A professional home inspection should be performed to determine any latent defects in the home. If there are repairs needed, the repairs can be done by the seller or the buyer. If the seller agrees, repairs performed by the buyer could be considered toward the down payment.
Why Would A Buyer Want A Lease Purchase?
- Buyer has time to solve credit problems before purchase date
- Buyer needs a home and needs time to build up a down payment
- Sometimes repairs or improvements can be made by the buyers and applied to the purchase
- The buyer would like as long a lease term as possible rather than move again
- At the end of the lease term, buyer can now apply for a mortgage with credit repaired
Why Would A Seller Want A Lease Purchase?
- The up front option payment increases the return on investment
- The seller can lock in a good price for home in the near time frame
- A great solution for the seller who needs to move with a new job
- The agreement can bring in excellent tenants with long term occupancy
- If the buyer knows they will end up with the home, they will take good care of it
Is A Lease Purchase Right For You?
Whereas this article is meant strictly for general information and should in no way be considered as legal advice, one should consult an attorney, realtor, and accountant for the best advice. The Lease Option is one tool that folks who want to own a home and who can’t save a down payment or have had credit problems can use to achieve a real estate goal.
This Report Brought To You By Marty Patrizi
Marty is a Realtor at The Bean Group. Marty can be reached for more information or comment at 603-781-4099 or by email email@example.com. Click here to see what Marty’s clients are saying => Testimonials