Are you looking to buy a home but aren’t sure if you’re ready? If you’ve been giving it some thought and haven’t made up your mind, a lease option may be the opportunity you have been looking for. Keep reading about the the buyers guide to lease options, to learn more about lease option properties and how they can help you reach your real estate goals!
A lease option is a great alternative for would buyers. There could be many reasons why you haven’t bought a home. It could be a blemish on your credit or with the price of homes going up maybe you don’t have just enough saved up for a down payment. Using a lease option, or rent to own structure will allow you to lease a home, with the option to buy or walk away after the lease term is up.
How It Works
The lease agreement is very similar to a regular rental agreement but with the added option to buy at the end of the term. But there are some key differences remember, such you are responsible for the repairs and maintenance . This helps prep you for being a homeowner and what responsibility comes with owning. Also a higher than average rent payment each month but that depends on your budget as well.
What You Will Have To Do
You’ll want to have an inspection of the house done before signing the agreement. At least this will give you an idea of future repairs you will need to make. Some repairs can be very expensive and you may not be comfortable taking on a property with such large issues. You should also have a professional appraisal of the house done. This will ensure that the price the seller is asking is fair, and will be approved by a lender in the future. You never want to skip an inspection or an appraisal just to get a shot at buying a home.
Just remember you will be the one responsible for the repairs as opposed to the owner of the home. You will also need to pay the property taxes which are included in the payment as well . These extra expenses, plus the typically higher than average rent, assure the homeowner has a great tenant in place with the potential to buy at the end of the term.
There are several benefits with a lease to own agreement with a local seller. First you’ll have to a house that meets your criteria before you have the down payment together or before your credit will qualify for a loan. These are things that are necessary and should be taken care of during the leasing period of your agreement. You will also have a price locked in at the beginning, so if the market goes up over the course of the agreement, you will only need to pay what was agreed upon originally. You don’t want to enter into an agreement in an area where homes are actually decreasing in value.Buying in an area with decreasing value will not be able to appraise at the end of term.
Another great benefit is having the ability to “test drive” the house. You can really get a sense of what it will be like to own, before actually being the owner. You’ll be able to determine the monthly maintenance and ownership expenses associated with home ownership.Something else is being able to look at commute times and area schools. You will be able to make sure that the neighborhood is really right for you, eliminating any chance regrets after you buy.
You will also have the peace of mind in knowing that you have the guaranteed option to buy the house. You won’t need to pick up and move at the end of the lease term so long as you are able to get the financing you need, as well as the down payment. Your credit should also be restored, allowing the buying process to run smoothly for you.
So you see a lease option also has big benefits helps eliminate a lot of risk when buying a home. Those with little home buying experience have an opportunity to reap the rewards and take advantage of the time with a lease to own property.