5 thoughts on “How does renting with a Lease option work?”
Renting with an option means that you agree to rent for a certain agreed apon amount of time, and part of your rent each month goes toward the down payment, at the end of the lease. The trick, however, is to make SURE you get a receipt written each & every month from the landlord, or…the landlord could say you were late on a payment, & keep your "deposit." Be wary, talk to a realtor.
a lease is just a contract of how long you will stay and the rules of what you can and can’t do while in the apt. not sure what you mean by how it works……
On a lease option, you normally pay whatever the asking rent is, like a rental, first and last/deposit, along with an add’l downpayyment of whatever the owner asks, could be anywhere from 5-25k or more depending on where you live. This down/deposit "holds" the place for you as you rent it, at whatever price you and the owner agreed you would pay to purchase it. The lease could be as short as less than a year to 2 or more years, and be renewed/extended upon mutual agreement. If this becomes the case, the owner may ask for another down/deposit to hold it for that extended period of time. These deposits are non-refundable. They give you, the buyer an incentive to get your ducks in a row, so to speak, in the time given to purchase the property outright. Hope this answers your question!
Why not buy instead? There are programs that I know of for first time home buyers, even with low fico scores and a small down payment. I also know of non profit programs that will help you with the down payments.
A landlord agrees to give a renter an exclusive option to purchase the property. The option price is usually determined at the outset, but not always, and the agreement states when the purchase should take place ? whether, say, six months, or a year or two down the road.
A portion of the rent is used to make the future down payment. Most lenders will accept the down payment if the rental payments exceed the market rent and a valid lease-purchase agreement is in effect.
Before you opt to do a lease option, find out as much as possible about how they work. Talk to real estate agents, read published materials, and, in the end, have an attorney review any paperwork before you and the tenant sign on the dotted line.
Renting with an option means that you agree to rent for a certain agreed apon amount of time, and part of your rent each month goes toward the down payment, at the end of the lease. The trick, however, is to make SURE you get a receipt written each & every month from the landlord, or…the landlord could say you were late on a payment, & keep your "deposit." Be wary, talk to a realtor.
a lease is just a contract of how long you will stay and the rules of what you can and can’t do while in the apt. not sure what you mean by how it works……
On a lease option, you normally pay whatever the asking rent is, like a rental, first and last/deposit, along with an add’l downpayyment of whatever the owner asks, could be anywhere from 5-25k or more depending on where you live. This down/deposit "holds" the place for you as you rent it, at whatever price you and the owner agreed you would pay to purchase it. The lease could be as short as less than a year to 2 or more years, and be renewed/extended upon mutual agreement. If this becomes the case, the owner may ask for another down/deposit to hold it for that extended period of time. These deposits are non-refundable. They give you, the buyer an incentive to get your ducks in a row, so to speak, in the time given to purchase the property outright. Hope this answers your question!
Why not buy instead? There are programs that I know of for first time home buyers, even with low fico scores and a small down payment. I also know of non profit programs that will help you with the down payments.
A landlord agrees to give a renter an exclusive option to purchase the property. The option price is usually determined at the outset, but not always, and the agreement states when the purchase should take place ? whether, say, six months, or a year or two down the road.
A portion of the rent is used to make the future down payment. Most lenders will accept the down payment if the rental payments exceed the market rent and a valid lease-purchase agreement is in effect.
Before you opt to do a lease option, find out as much as possible about how they work. Talk to real estate agents, read published materials, and, in the end, have an attorney review any paperwork before you and the tenant sign on the dotted line.