If you are building your credit, and want to a buy home, a lease option may be an ideal way to achieve homeownership.
The "buy home - lease option" type of home listing has pros and cons you should consider. You may end up investing in a property that you don't ever buy. Yet, having the option to buy a home and have a portion of your rent payments go toward the purchase can be very appealing.
Only a small percentage of homeowners are willing to offer you a buy home lease option. Most homeowners want to sell their home the traditional way so they can pay the mortgage. The lease-to-buy option is an unusual way to buy home real estate because there are no guarantees. Typically, you sign an agreement that says you will rent the home for a specific period of time and then buy it outright. In some cases, the your monthly rent goes directly towards the price of the house. In other cases, only a portion of your rent goes toward the purchase. Sometimes you pay more than the rental amount and the overage is applied to a down payment on the property.
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Typically, with a "buy home - lease option" listing, you need to pay a percentage of the purchase price up front. A disadvantage can be that if you decide not to buy the home, the owner gets to keep that money. However, if the property owner doesn't require an upfront investment, you may be getting a start on buying a home without the initial investment of a down payment.
Buying a home via lease-to-own is a great option if you are building or rebuilding your credit and don't qualify for a traditional mortgage. Once your credit has improved, you can apply for financing to buy the home.
To learn more about homebuying with bad credit, read this article.
When you find a "buy home - lease option" listing of interest, one thing you should do as if it were a tradition home sale is have the property inspected by a professional to ensure it does not need major repairs. When you apply for a home loan, your lender will require an inspection and you don't want to be surprised by issues that cause lenders to deny your loan.
Although you will find few properties advertised with a lease option, some owners may agree to the terms if you ask. To look at real estate listings in your area, go to Reply! now.