Do you want to buy a home, but you aren’t quite ready? Perhaps you are not able to save for a strong down payment and closing cost. Maybe a few untimely slow pay invoices caused you to be late on a couple things and your credit took a hit. If so, a lease option may be the opportunity you have been looking for. Learn more about lease option properties and how they can help you reach your homeownership goals!
Your family deserves a nice home in a good area. They stood by you during the lean times and now you want to reward them with a home. Using a lease option, or rent to own with the exclusive right to buy structure will allow you to lease a home your family will love to come home to, with the option to buy or walk away after the lease term is up.
Lease Purchase Agreement
How It Works
The agreement itself is often similar to a rental agreement with an option to buy, also known as a lease purchase with the Exclusive right to buy at the end of the term. That said, there are some key differences to be mindful of, such as your responsibility to make repairs, and a higher than average rent payment each month.
What You Will Have To Do
You will always want to have a thorough pre-inspection of the house completed before signing the lease purchase agreement. This will give you a heads up on any future repairs you will need to make. Some repairs can be costly, which could cause you to hesitate before moving forward. Not so fast, many owners maybe willing to repair those items so try to negotiate those repairs.
You should also have a professional appraisal of the house done. An appraisal is an estimate of the market value of a home from a professional but disinterested party. Their job is to tell you what they believe the home is worth and not match the price to the agreement or make it beneficial either party.
This will ensure that the price the seller is asking is fair and will be approved by a lender in the future. Keep in mind market conditions may shift over the time between you are living there and when you are ready to buy. A supplemental appraisal maybe necessary. You never want to skip an inspection or an appraisal just to get a shot at buying a home.
Also, as mentioned above, you will be the one responsible for repairs as opposed to the owner of the home. It is important to also include in the agreement who will make major repairs, like if a storm causes extensive roof damage for instance. A good idea is to put a ceiling on what you the tenant-buyer are responsible. Paying for maintenance is fair but buying a new roof for a home you don’t own yet seems excessive.
You will also need to pay the property taxes according to some agreements. These extra expenses, plus the typically highere than average rent, can slow you down if you are saving to buy the property in the future. Keep these costs in mind before signing an agreement.
There are several benefits to entering into a lease to own agreement with a local seller. First, you will be able to find and secure a beautiful home you will love before you have the down payment together or before your credit will qualify for a loan. Take the time during the lease to improve your credit and save for a strong down payment. You will also have a locked in price, so if the market goes up over the course of the agreement, you will only need to pay what was agreed in the agreement.
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 can determine your monthly maintenance and ownership expenses and take a good look at commute times and area schools. You will be able to make sure that the neighborhood is really right for you.
You will also have the peace of mind in knowing that you have the guaranteed option to buy the house. No need to pack all your things up and move at the end of the lease so long as you are able to get the financing you need, as well as the down payment. Your credit should now be fully restored, allowing the buying process to run smoothly for you.
One great trick is to find a property that has been listed for a while and purpose a rent to own agreement. They will not need to lower their price, and you will get the opportunity to buy a house you love.
Last tip pay attention to what is going on in the housing market. If the prices of homes are on the decline you don’t want to be locked into a price higher than the market when its time to exercise the lease purchase agreement and purchase the home.
In Conclusion. Lease with option to buy or rent with the option to buy,maybe a good option for some business owners the information in this blog will be a good guide to use. The writer is not an attorney the blog is for infomation purposes only. Always conduct all real estate transactions with a competent real estate professional representing you.
Fresh Start Home Sales
2330 Scenic Highway
Snellville, GA 30078
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