Many individuals out there looking for a new place to call home are familiar with the word lease but they do not know what it means when it comes to a realtor or a house rental service. Brooksville residents should be aware that a lease-to-own house is the exact same thing as a rent-to-own home with the exception that a lease is combined with an option to purchase the property within a specific period. These types of agreements have become very popular recently since the market crisis because many new home buyers cannot meet the tougher loan qualification requirements today. Not only is leasing good for buyers, but sellers find that it is one of the only ways to make a sale nowadays because of the recession.
How Does the Contract Work for Leasing Agreements?
In a typical leasing agreement, the borrower pays an option fee that is 1% to 5% of the price, which is credited to the purchase price. The borrower pays a market rent, and an additional rent premium that is also credited to the purchase price. The option fee, option period, rent, rent premium, and purchase price are all negotiable items with a house rental service. Brookville residents should be aware that if the purchase option is not exercised, the buyer loses both the option fee and the rent premium. Buyers generally prefer a long option period as it provides more time to accumulate savings and repair credit. A long period can be reciprocated on them, however, if they are never able to exercise the option, since they lose the rent premium they have been paying all the while, in addition to the option fee.
Using a Lease Purchase to Buy a Home
A lease purchase offers homeownership opportunities to consumers who cannot qualify for a loan from any source, but are confident enough that they can make the payments. It is a bet that before the option period expires, the lessees will qualify for the mortgage they need to exercise the purchase option from a house rental service. Brooksville residents during the option period will have the opportunity to rebuild their credit and also accumulate savings while lining in the home. Be aware of the conditions of the contract to your leased home that would nullify the agreement. Such provisions such as the failure to pay rent on the first day of the month can make it very difficult to finish a lease.
*Disclaimer: The views expressed here are those of the authors and do not necessarily represent or reflect the views of A Plus Realty Management*