Are you hopeful about buying a new home, but you are unsure about obtaining the financing that is needed to qualify for the mortgage? There are many situations where traditional real estate financing can be beneficial, but in certain circumstances you might consider a different type of contract instead. A Lease Purchase Agreement combines the option to rent a home with the process of purchasing a home, creating a situation that makes it easier for a person to move in right away with the option to buy the home in the future.
How Does Lease Purchasing Work?
When a Lease Purchasing contract is put in place, the potential buyer can move into the home and rent it for a specific period of time. A traditional rental agreement is put in place, and the contract is expanded to include exclusive rights of first refusal option later on when the home is available to purchase.
Typically, a Lease-Purchase contract will include a few important details, such as:
- The value of the property to lock in the price
- Monthly payments that need to be met
- How much of the rental payments will go towards the down payment of the property when the lease is over
- Duration of the agreement (typically 2 – 3 years)
- Rules and terms that are applicable to the transaction, such as home repairs, HOA fees, property taxes, etc.
Do You Need a Lease Purchasing Option?
The lease-to-own method has become more popular, especially in recent years since the economy changed. Many people are interested in purchasing a home, but they are worried about the fact that they can’t qualify for a mortgage. Potential home buyers have a harder time qualifying for the financing that is needed, because the loan requirements are much more difficult than they used to be.
Lease purchasing makes it possible for you to be in position to buy a home, and the situation is also beneficial for the home seller as well. When you are trying to buy a home, Lease Purchasing is beneficial because of several reasons: it minimizes the amount of out-of-pocket cash that you will need to pay up front, you still have the option to buy the home even if your credit is bad, and you have the opportunity to try the home to see how you like it before the transaction occurs. Additionally, many people find that they can maximize their equity growth with Lease Purchasing, and there is minimal risk to the transaction.
Sellers find the Lease Purchasing beneficial because they can maximize the sale price for the home, they have a positive cash flow when the home is being rented, and the pool of buyers is bigger since more people can qualify for this type of real estate transaction.
Duffy Realty of Atlanta can assist with all types of real estate transactions. Whether you have traditional financing or you are considering a lease-purchase, we are happy to help with the process. Call us today at: (678) 318-1700