Buyers frequently ask these questions about a lease-option purchase.
Q: How do I benefit from buying a home under a lease option?
A: Leasing with an option to purchase is a a great way graduate from renting a home to owning a home. It offers many advantages over the traditional "go to a bank" method of purchasing a home.
1. Down payment: You do not have to come up with a large down payment is required. Instead you pay an amount up-front called “option consideration.” This is, generally about 5% of the ultimate purchase price. Option consideration locks in the price of the home during the term of the lease and gives you the exclusive right to purchase the property.
However, you are not obligated to purchase. If you exercise the option, the option consideration is applied toward the purchase price. If you do not exercise the option, it is not refundable. In the event you do not exercise the option, the option consideration compensates the investor/owner for keeping the property off the market during the term of the lease and for locking in a purchase price, even if the value of the home increases (which it usually does).
2. Rent credit: If you decide to exercise the option, an agreed-upon portion of your monthly rent can be applied to either the purchase price or the down payment which may be required by a mortgage lender. This allows your rent money to be working for you, instead of being thrown away.
3. Benefit from any appreciation during the term of the lease.
4. You get an opportunity to check out the home and neighborhood before deciding to buy.
5. No up-front loan qualification: In most cases, we only require income verification and personal references. In addition, when you decide to exercise, we work with many different lenders, so we can work with you to help you obtain the best financing for the best terms.
6. You get time to save additional money for a down payment and fix credit issues in order to get financing for the ultimate purchase of your home.
7. No property taxes to pay during your lease term.
8. Quick move-in: You do not have to wait a couple of months to close. You can move in to your home in days.
Q: Why should I pay option consideration when
I can just rent and get my security deposit back when I move out?
A: When you rent, your rent money is not working
for you. It just disappears down a rat hole month after month. By contrast, your
option consideration allows you to move toward home ownership, while still
keeping your payments affordable.
Q: What if I decide I don’t want to buy the
property?
A: You are not required to exercise the purchase
option: However, the option consideration is non-refundable should you
decide not to exercise the option and buy.
Q: What if I need more time to qualify for a
loan before buying at the end of the term?
A: Depending on circumstances, it may be possible
to renew the lease for another term. This will probably require payment of
additional option consideration. It could also require that the purchase price
be renegotiated.
Q: What about utilities, property taxes and
homeowner’s insurance?
A: All utilities are the responsibility of the
tenant/buyer. Until you purchase, all taxes are paid by the landlord/seller. The
landlord seller will also pay for hazard and liability insurance. However, you
should obtain renter’s insurance to protect your contents.
Q: What about maintenance?
A: The tenant/buyer is responsible for regular
upkeep and repairs, up to an amount specified in your agreement. The landlord/seller
For remains responsible for major repairs not due to the misuse or negligence of
the tenant/buyer.
Q: What if I have more questions?
A: Call or email us.
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