Lease Options offer Beneficial Alternatives

For those who cannot get a typical home loan because their credit has some flaws, there is hope. A growing trend by investors to offer lease options to potential homebuyers is giving home ownership hope to those who were not so long ago denied the opportunity.

A lease option essentially offers someone the ability to live in a home for a certain amount of time usually 24-36 months with the option to purchase the home at a later date for the current asking price.

There is usually an opt-in fee associated with a lease option in addition to a monthly ‘consideration’ fee. The monthly fee combined with the original opt-in fee can be used for your down payment and closing costs at the time of actual purchase. If you decide not to purchase the home at the end of your option term, these monies will not be refunded. Engaging in a lease option can be a good move in many circumstances, particularly if you are trying to establish or reestablish good credit. It’s also a good deal for someone who needs time to save the money but generally has a difficult time with the discipline required as the down payment is part of the monthly lease. The best benefit of a lease option for the potential buyer is that it locks in the price of the home at today’s price rather than an appreciated value two or three years from now.

We also need to look at the benefits that offering lease benefits provide the home seller. People who enter into lease option contracts are not traditional renters. These are people who are hoping to own the home they are leasing. As such, they are much more inclined to care for this property much better than someone who has no vested interest in it. You also have to consider that there are fewer homes for sale that offer the possibility of lease options so the few that do are in high demand. They have the potential to be contracted much more quickly than a home that is simply offered for sale without the opportunity for a lease option. Lease options also tend to be for a much longer period of time than a traditional rental agreement. This means that there will be a steady income generated from this property rather than having it sit empty waiting for a realtor to show it.

Lease options offer something valuable to both the homeowner and the future homeowner. Keep in mind though that these deals can go bad and you need to protect yourself if you are either the owner of the property or the one leasing the property. Be sure to have an attorney check your papers and explain everything so that you are absolutely sure of what your rights, responsibilities, and privileges are as far as the property is concerned. More importantly, plan to enjoy a mutually beneficial relationship for at least a couple of years to come.