3 thoughts on “whats the difference between rent to own and lease option to purchase?”
they are the same some jsut word them differently!
they both have a term that you rent or lease and then at the end of the term you can exercize your option to buy.
Typically in a rent to own situation a portion of your monthly rent goes toward the purchase of the house, you are the renter and the person is the owner/landlord. In a lease purchase situation you are usually asked to put money down upfront for the right to purchase the property within a given time frame, usually no more then about 36 months and at a given price. Also, YOU ARE THE HOMEOWNER! In the event something goes wrong in a rent to own situation, you call the landlord and they fix it, in the event something goes wrong in a lease purchase situation, you are responsible for the repairs. From a lending standpoint a lease options is a great way to get into a house right now. When you do a lease option, when it comes time to buy out the options (ie get your bank financing in place) your bank will look at this transaction as a refinance and not a purchase, so any equity is built into your loan, this can be a huge difference in rates and payments! On the other hand, the rent to own you are basically using the money agree upon by you and the landlord as down-payment money, so when you go to purchase the house this will be looked at like a purchase, so you do not get the built in equity.
they are the same some jsut word them differently!
they both have a term that you rent or lease and then at the end of the term you can exercize your option to buy.
Typically in a rent to own situation a portion of your monthly rent goes toward the purchase of the house, you are the renter and the person is the owner/landlord. In a lease purchase situation you are usually asked to put money down upfront for the right to purchase the property within a given time frame, usually no more then about 36 months and at a given price. Also, YOU ARE THE HOMEOWNER! In the event something goes wrong in a rent to own situation, you call the landlord and they fix it, in the event something goes wrong in a lease purchase situation, you are responsible for the repairs. From a lending standpoint a lease options is a great way to get into a house right now. When you do a lease option, when it comes time to buy out the options (ie get your bank financing in place) your bank will look at this transaction as a refinance and not a purchase, so any equity is built into your loan, this can be a huge difference in rates and payments! On the other hand, the rent to own you are basically using the money agree upon by you and the landlord as down-payment money, so when you go to purchase the house this will be looked at like a purchase, so you do not get the built in equity.
Good luck….
THIS MEANS THE SAME THING.