Basics of a Lease-to-own purchase

The option is a vital part of a lease-to-own purchase. Here are the features of a basic lease option:

• Buyer has to pay the option money to the seller for the only right to buy the property and it can be quite a lump sum.

• The buyer and seller have to agree mutually on the purchase price, sometimes much higher than the market value.

• During the option, the buyer also makes a deal about the monthly rent which would be in future for lease-to-own property.

• The term is negotiable, but it is generally for one to three years, and the buyer can take the help of the bank to pay the seller in full.

• The option money mostly does not apply to down payment and a portion of the rent goes for the purchase price. The option money is mostly non-refundable.

• Only if the buyer defaults that the property can be given to some other prospective buyer.

• Buyers are liable to maintain the property and pay all expenses associated for taking care of the lease-to-own property including insurance.

• The buyer will have to buy the property. If he or she cannot, then the rent payments are declared void.

Important points for lease to own property:
• Home inspection is done.
• Title policy should be examined.
• An appraisal should be obtained.
• Seller disclosures should be read thoroughly.
• Home warranty plans, pest certification, and other certificates should be looked into carefully

Advantages

• Sellers mostly can get market value for their properties especially on a vacant lease-to-own property.

• Although the lease payments are more than the actual rent charged in the market, the buyer can earn on the appreciated amount later after he or she has bought the place.

• Buyers make a reasonable down payment, with no qualifications needed, thus making a lease to own purchase a profitable one.

• If the buyer defaults, sellers do not have to refund any money

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