A lease to buy or rent to own, means that a tenant rents a house owner with the intention of buying it at the end of the lease term. There are a number of advantages and disadvantages for both parties. It is a stepping stone between renting and buying a home.
In a situation of rent to buy, sign a contract that is very similar to a lease, but has additional clauses that indicate you have the right to buy the house or at the end of the lease term. The owner can not sell it to anyone else without your permission during the lease term. Typically, you pay an amount of initial at the beginning of the lease, which applies to the amount of payment for the purchase of the house payment. A portion of the rental payment every month is separated and is also used for the down payment.
Use a lawyer to draft the lease with option to purchase, and fully understands the agreement before signing. You want to avoid any confusion as to the details of the contract, including the first initial payment, monthly rental rates of monthly and down payment. Also, try the house as if you were buying the usual: hire an inspector and ask the owner to make any changes or necessary maintenance before buying the house, or commit to make them yourself with a lower purchase price.
Benefits for the buyer
The main advantage for the buyer is that a lease with option to purchase is like buying something in reserve in a store. You may not be ready to buy the house financially, emotionally or because of low credit scores, but at the end of the lease, you are in a better position and you can then buy the house. You can also “try out” the house during the lease, and are not obliged to buy at end of lease if you change your mind. However, if you decide not to buy the house, you lose the down payment you made in the beginning of the lease term. Another advantage is that you can pay the amount of down payment gradually rather than all at once. You can also establish a good payment history and improve your credit score to qualify for a better loan once the lease period is over.
Advantages for the seller
Home sellers can request a payoff amount higher rent to the buyer because the incentives for buyers . The seller also keeps the tank no matter what, and usually do not pay a commission to the realtor, and the seller usually sell the house to the buyer regardless. The buyers tend to be ideal tenants more than usual, and who are attached to the house and want to keep it well and make payments on time, and that eventually will possess. The seller also get the peace of not having an empty house, and may sell a house you no longer want a tenant interested.