Many hopeful buyers with bad or poor credit are finding it in their best interest to rent-to-own or lease to buy. It's a great opportunity to repair your credit and buy a home. A win-win situation for everyone.
A lease purchase is a contract that allows renters to lease the property and possibly buy it at the end of the lease. The concept is not new, but it is just now gaining momentum. Bad credit is not the only reason buyers are finding this option appealing. Some buyers are just not really sure if they are ready to make the big step and take on the responsibilities of buying a home. The best thing about a lease purchase option is that it gives buyers a chance to test drive homeownership.
There are several sellers in today's housing market that are leasing their homes to help get them sold. Developers are also leasing their newly built homes, as they find themselves overloaded with unsold homes.
Understanding how a lease purchase works is very important. Typically, there will be a one to three year period for the lease term, and upfront lease option fees. Most of the time this fee is non-refundable. The option fees can range anywhere from $0 to $10,000, with the average fee being $1,500. Keep in mind these fees differ from state to state and city to city. Under a lease purchase agreement, a portion of you rent goes to the equity of the loan and is applied to the down payment when you purchase the home.
As with any home purchase, whether you buy now or lease now, you will want to have the home inspected and document any necessary repairs. Also, take photos to document the home's condition. Make sure you keep records of your payment for each month. Verify there are no liens of any type against the property. This will take a short trip to the court house to search the property records. Keep up with all the paperwork that is associated with the lease purchase agreement and the home itself.
Keep in mind, it is always a great idea to use a real estate professional to assist you through the lease purchase agreement. This will ensure that you do understand the contract, know how it works and have a successful transaction.
Great idea on how to use a realtor in that situation. By using a realtor a seller could relieve a lot of stress in the current market.