Lease Option to buy
Are you currently thinking of purchasing a home, but now sure if it’s the right time for you? If you are considering purchasing a home, it is probably because you are tired of spending 10’s of thousands of dollars a year renting, with nothing to show for it once your lease expires. With today’s current inventory of homes being at a record high, a lot of sellers are offering homes on a lease with the option to buy. Before making your lease with the option to buy, you will want to make sure and consult with your Real Estate Attorney about the different laws that go with a lease option, in your State.
Leasing with the option to purchase is usually a benefit for the buyer and the seller. The seller has had a hard time selling the property, for whatever reason, so they have to resort to a lease option, in order to insure sale of the property in the near future. The sellers main concern, is not to let the loan go into default, so allowing someone to pay “rent” on the mortgage, saves them the stress and headaches of figuring out how to get out without effecting their credit. It is extremely beneficial to the buyer, because they are in a position in which they cannot afford a full down payment at once. The lease to buy, allows them to pay a rent that is somewhat higher than that of a normal lease or rental, but it is building a down payment that will be applied toward the purchase of the home in the future. If you are a buyer considering a lease option, you will want to keep in mind that when you are paying your rent, you raise the chances of the home becoming worth more than what you actually paid for it, in the future. No to mention, you are able to purchase the home with little or no qualifying, as long as you show good payment history on the note. If for some reason, you do not pay your rent, you will not be refunded any monies that you paid during your duration in the home.
The buyer will initially pay the seller a said amount of money that can be the minimum of $1, depending what is agreed upon in the contract. Once that money is paid, you and the seller work together to decide on a purchase price. You both can decide to on a price now, or wait to see what the market conditions look like later, and purchase it for future market value. If you are a buyer, and you live in the house for, lets say 1 year and you decide that you no longer want to buy the property, you have NO obligation to do so. But always remember, none of your money will be refunded to you. If you are in a financial position to lose the money already invested, breaking the lease is entirely up to you.
When you finally decide if a lease option is right for you, you will want to consult with your Real Estate Agent immediately. They will provide you with all the necessary disclosure and documents to get you through the process smoothly with very little headache.