How To Find A Lease Option To Buy Home
Learn how to find a lease option to buy a home in your city. In today’s market with thousands of homes in foreclosure, lease options are becoming very popular. The qualifying is easy and there is no credit history required. A lease option can help you purchase a home immediately without bank approval.
To do a proper lease option you will need a contract that states:
- The sales price of the home.
- Term of the lease.
- How much money is to be paid towards the down payment.
- Contingencies of the lease option.
- Rights of both seller and buyer.
- What is a Lease Option? A lease option can go by many names: rent-to-own, buy-to-let, option with a lease and lease option. A lease option to buy a home is when a borrower places an option (deposit) on a home or land with the intention to purchase at a later date. There is no obligation to exercise the option and can be terminated with a loss of the initial deposit.
Normal Terms of a Lease Option. A lease option requires a down payment from $1 to $1 million. The seller can wave the deposit, but then you do not have an option. All contracts should be written and approved by someone in authority from a Real Estate Attorney to a Broker who is familiar with such deals.
- Buying a Lease Option From a Seller. Many owners will attempt to sell a lease option to a desperate buyer their self. This will bring many problems to both sides, as neither one knows much about contracts and liabilities. Hire a Broker or Attorney when contemplating a lease option.
- Buying a Lease Option from a Brokerage. Many Brokerages will have lease options available. An easy way to check for availability is through the MLS (multiple listing service) and search financing terms. Many sellers desperate to sell their homes will have lease option listed. Keep in mind a lease option through a Brokerage will require a higher down payment to compensate the Real Estate Agents, normally a 6% fee.
- Looking On Your Own. Watching the newspapers will be the first avenue you should choose. Many sellers will advertise in the local papers. Look at all ads that state the seller is looking for someone to assume his loan also. Creative financing is step one in obtaining a lease option.
- Advertising for Lease Options. If all other options fail, try advertising yourself in newspapers, at grocery stores and even Pizza restaurants. Simply put, looking to buy beautiful home with a lease option or rent-to-own.
- Home Contingency. Buying any home should always come with a contingency: Seller suggests that any borrower should contact an Attorney before final signatures are placed on the lease option contract. Lease options are very easy to do and should only be consummated in an escrow account. The borrower must have proof of the deposit and payments made, at the time when loan approval is sought. A contingency for the appraisal of the property should be added to the contract also.
Although lease options can be a way to buy a home with no credit, there are pitfalls. It is very important to have an attorney or experienced Broker read over the contract first. Here is a list of things to be careful about:
- Property may not appraise at the end of the contract, important to have appraisal contingency in contract.
- Deposit is not refundable if the buyer or property does not qualify.
- Seller may put additional loans on the property if contingency is not written in contract.
- Never do a lease option without an escrow account.