Rent-to-Own homes, also known as Lease Purchase Homes or
Lease Option Homes, are a great way to buy a house if you are
unable or unwilling to commit to a purchase. A lease option
basically means you are leasing or renting a property with an
option to buy with the future price of the property fixed at the
time the option is signed.
The future buyer (or renter) pays the seller a
negotiated up-front payment to purchase an option to buy the
home at a fixed price after an agreed upon time, which is usually
one year. During this time the buyer will often pay a monthly
payment that is in excess of market value. This excess will
usually be credited towards the down payment should the renter
exercise the option to buy the home. In the event the renter
decides not to purchase home, both the option money and any excess
rental credits are forfeited to the seller. The renter can
sell his option to buy to a third party.
This method of easing into home
ownership is sort of a hybrid between buying and renting.
It affords one time to decide if a house if right for them, time to
fix any potential credit problems or work issues, and time to save
for a down payment.
The seller is committed to sell the house at the agreed upon price,
even if the house increases in value. However, should the
value of the house decline, the renter has the option of
backing out of the deal. He will, of course, forfeit his
option and rental credit money, but he will not be forced to buy a
house that he might no longer want to purchase.
To find properties that offer a lease to own option, talk to
brokers and agents just as if you were looking for a regular home
purchase. The homes that usually sell in this manner are the
ones that have been on the market for
quite some time, where the sellers are eager to explore any
option to sell the properties. Before purchasing a lease to
own option, have a real estate lawyer thoroughly examine the
contract.
Learn more about buying a home from our real estate experts:
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