A lease option is an arrangement in which the lessor agrees to lease a house at a certain rate over a certain period of time. At some point, the lessor has the option to buy the home at a particular, pre-agreed-upon price.
If you’ve suffered at all in the recent housing crisis, you may, for credit reasons or financial reasons, be unable to qualify for a bank loan or afford the house you really want to move into. But there are options for this seemingly difficult situations. Especially if you’re looking to repair your credit. If this is you, then you may want to look into the possibilities of getting a lease-to-own or lease option deal on your house.
When you set up a lease option with a landlord, you agree upon a lease term and a set price for your monthly lease payment. However, somewhere in the contract there will be a stipulation that you have the option to buy the house, after a certain date, and at a certain price.
You’ll pay for that option, though—normally, your lease will be above what it otherwise would be in a standard lease situation. This extra money is often put towards a down payment on the house when and if you decide to buy. If, however, you elect not to buy the house—maybe the neighborhood was not to your liking—then the landlord will most likely keep that extra rent: it will be considered payment to the landlord for offering the option.
Most lease options are unique in that they are almost entirely configurable by the buyer or person receiving the lease, as well as by the seller or the person offering the lease. This means that any of the terms can change, and that you’ll have to do your own footwork to make sure that you get a good deal.
You’ll want to check rent or lease prices in the neighborhood for similar homes, as well as home prices. Compare these with what is offered by the loan company, so that you can make sure that you are getting a good deal.
If, on the other hand, you are a person who is trying to unload a house, or if you have a client who is trying to unload a house, then a lease option can be a great way to expand the base of people who can afford to purchase or have the credit to purchase your house. Even if they don’t buy the house, you get at least to make a good amount of money, just for offering the option to buy. Additionally, you can extend the offer to buy to people whose credit is insufficient to get a bank loan right about now.
There are plenty of resources out there than can help understand how to execute a lease with an option to buy for your clients. If you or a client of yours is interested in buying or selling a house using lease options, check out needtosellmyhousefast.com; they can help you structure the deal and find the right lessor or lessee for your house.
In my next post, I will be covering sandwich lease options, a great technique you can use to help homeowners in danger of foreclosure, while at the same time help people with bad credit purchase a house.