How To Buy A House Using A Lease Option

Rent-to-Own homes, also known as Lease Purchase Homes or Lease Option Homes, are a great way to buy a house if you are unable or unwilling to commit to a purchase. A lease option basically means you are leasing or renting a property with an option to buy with the future price of the property fixed at the time the option is signed.

The future buyer (or renter) pays the seller a negotiated up-front payment to purchase an option to buy the home at a fixed price after an agreed upon time, which is usually one year. During this time the buyer will often pay a monthly payment that is in excess of market value. This excess will usually be credited towards the down payment should the renter exercise the option to buy the home. In the event the renter decides not to purchase home, both the option money and any excess rental credits are forfeited to the seller. The renter can sell his option to buy to a third party.

This method of easing into home ownership is sort of a hybrid between buying and renting. It affords one time to decide if a house if right for them, time to fix any potential credit problems or work issues, and time to save for a down payment.

The seller is committed to sell the house at the agreed upon price, even if the house increases in value. However, should the value of the house decline, the renter has the option of backing out of the deal. He will, of course, forfeit his option and rental credit money, but he will not be forced to buy a house that he might no longer want to purchase.

To find properties that offer a lease to own option, talk to brokers and agents just as if you were looking for a regular home purchase. The homes that usually sell in this manner are the ones that have been on the market for quite some time, where the sellers are eager to explore any option to sell the properties. Before purchasing a lease to own option, have a real estate lawyer thoroughly examine the contract.