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12 Reason For Buying Your New Home With A Lease Option
Lease option is short for Lease With Option To Purchase Real Estate. It is also know as rent to own, lease to own, rent to purchase or lease to purchase depending on where you live. They are basically all the same thing, which is: a person leases a property and pays for an option to purchase the property for an agreed upon amount within a certain time frame. An example of a simple lease option would be: you lease a property for 2 years and pay the owner a fee of $1,000 as an option fee. This means that you have control of the property for 2 years during which time you have the option to buy it or not, as the owner can only sell it to you. If you decide not to buy you usually forfeit the $1,000, but if you do buy it, the option fee is normally credited to your down payment. The 12 reasons that make a lease option the best way to buy your new home: 1. The present lending requirements make it too hard to qualify for a loan (as is happening now).
2. You don't have a down payment. (or enough of one to qualify for a loan).
3. You're in the process of fixing your credit or establishing credit to get a loan.
4. You haven't been employed in your field long enough. (Recent graduate).
5. You don't have a rental history. (living with parents).
6. You can't afford loan payments at present. (you'll be able to in a year or two).
7. You can tie up a better property than you could afford to buy now and buy it later when you’re in a better financial condition.
8. You can buy a fixer (end up with sweat equity) and negotiate the option fee or rent so you can put the money into repairs.
9. You can negotiate a credit on the rent each month. (like a savings account).
10. You can treat the property as your own and decorate it the way you like.
11. You know that as long as you keep up your end of the bargain the property is yours to do with what you like.
12. The property won't be sold without your permission. These are the principal reasons that a lease option makes sense to a very diverse group of people, especially in light of the real estate situation today. Because of the lending industry problems it is harder than ever to get a loan unless you have a large down payment and excellent credit. If you are just starting out, have some problems that you're taking care of or just need a little more time to get the downpayment a lease option make a lot of sense. Many people want to live in a better home that they can afford and a lease option will let them do that, as they can move in and enjoy it now, then later when they can afford it they can buy it. They can also buy a fixer in a better area than they can afford now and negotiate to make the repairs in lieu of the option fee or with a portion of the lease payments. This gives them the opportunity to fix the home exactly as they want. With the high rates of foreclosures and other distress situations that are prevalent today, you need to make sure to deal with a person who won't get into trouble and possibly lose the property. As a precaution you could put the lease payments into an account where they are automatically paid to the lender. Make sure the taxes and insurance are current when you move in and arrange to pay these from the same account if they are separate. You should always use an attorney and possibly a real estate agent to protect yourself. Using an escrow, getting title insurance and having the lease option notarized so you can record it are some other ways to increase your protection. By taking these precautions you should be assured that you can get a clear title when you're ready to actually buy your home. Don Levy is a retired mortgage broker and investor who is getting more involved with his real estate website at http://profitinforeclosures.com and writing articles about many subjects including real estate.
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Contributor's Note
For more information on lease options and all types of real estate pick up a free report at http://profitinforeclosures.com
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PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
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