Lease with option to buy-how does this work?

Answer 1

This is up to the parties to the transaction. There are several options. The first is the purchase price. The purchase price can be a set price which allows the lessee-purchaser to gain equity while renting or can be determined at the time of closing. In most cases that latter is better for the landlord-seller but if the market declines, it may be better for the lessee-purchaser.

A portion of the rent may be applied to the down payment. Often the price is inflated slightly to allow the tenant to pay the down payment via rent. Mortgage companies will accept this as a down payment as long as the house appraises for the amount stated in the purchase contract.

Maintenance during the term of the lease may be the responsibility of the tenant or the landlord. If the tenant is getting any appreciation in value, then the maintenance usually would be the tenant's responsibility.

The tenant can be allowed to do repairs or modifications to the property or the lease can restrict such repairs or modifications requiring the landlord's approval.

I am sure there are numerous other contingencies but these are a few.

Answer 2

This is a standard lease only you have the option to buy the property, if you want. Everything should be spelled out in the contract that you sign for the lease. Essentially some, or all of the money that you pay for the lease will become a down payment and your lease converts to a purchase agreement.

Read your contract carefully. Be sure how much money converts to down paymeny. Know the expiration dates for the contract. If you are interested in buying it would be a good idea to have a real estate lawyer look at the contract.

Answer 3

Keep in mind that you can "Lease With Option To Buy" any type of asset - not just Real Estate, & that EVERYTHING in the Lease w/Option is negotiable between the 2 parties involved(subject to the laws of the particular State & Municipality at which the asset is located).
Also, even though everything may be included in 1 document, you are actually negotiating & agreeing to 2 different legal & financial transactions - the Lease(rental) of the asset,&, the Option (but not the obligation) to Buy the asset.

Answer 4

If you put the required amount of $$$ down (all depends on the seller) your rent payments go toward the purchase. Basically it is the owner who is carrying the mortgage. If you fail to make payments as prescribed in your contract the seller gets the house back.

Answer 5

in the experience that your credit isn't so super, that is helpful to to contemplate an FHA loan, many times you could qualify with basically 3% down, you basically ought to furnish plenty greater place of work work while it is composed of fha, yet you may nevertheless get the decrease expenditures of interest.