The Real Estate market is in high gear with the best option for the average property buyer. A new trend has emerged, and everyone who is in the market for a new home or those who have long considered making a property purchase under favorable options have finally hit a break! Owning a home or real estate property is no longer a far-fetched dream; in fact, home ownership has never been this easy. Lack of money or credit facility is no longer a hindrance to putting a roof over your head. Property ownership through lease options now gives you a chance to dream and make it happen.
What are lease options?
In brief, a lease option is a real estate financing instrument that gives a buyer the freedom and the opportunity to lease (rent) a property within the duration of the option period. An agreement for the lease option, as well as the option to buy the property at the end of the lease term must be made between the buyer and the seller. Lease options are often referred to as rent-to-own agreements. Exciting, isn’t it? Not too fast. There are things you should consider before you get totally revved-up to make a purchase through lease options:
Is lease option a good decision for you at the moment?
Although the upfront payment in a lease option is lesser (usually equal to two months of rent) than the amount you would pay for down-payment in buying a new house, it can still be a financial burden or risk. Especially since you won’t be able to get the option money back at the end of the lease period, regardless of your decision to buy the house or not.
Do you know where to look for a house or a property to lease?
You should have a properly-planned strategy in mind before you start hunting for hot properties to buy. You must consider both your current budget and your future financial outlook so you can determine whether you can afford to buy the house at the end of the lease term, or opt to improve your credit ratings to be able to get a loan.
What are the terms for the lease option?
You must negotiate the purchase price as well as the duration of the option period or the lease term, while taking into consideration your own financial capacity for the subsequent monthly payments. The worst thing you can do is overestimate your capacity to pay, yet have no financial backing to do so.
How much can you spend monthly for rent payment?
Although the buyer and the seller will have to agree on this, it is typical in lease options to also consider whether your payments will include expenses for bank fees, taxes or repairs, or if a percentage of the monthly payments will serve as rent credits and may be deducted from the down payment for the house.
Are you willing to spend for improvements and repairs?
You should. In most cases improvements on the property can be used as leverage in attracting lenders to give you a good loan to buy the house or property. However, you should make it a point to ask whether or not the agreement will require you to do so, or if the owner will enforce that he or she will pay for repairs and improvements.
When should you apply for a loan?
You should have a loan ready before your lease period ends. It is crucial because there’s always a risk of losing the property if you fail to pay the agreed purchase price at the end of your lease option agreement.
How long do you plan to lease the property before opting to buy it?
If you already have money to buy the property, you should make a move to inform the seller so adjustments can be made. If you opt to buy the property at the end of the lease, make sure you have financial backing to do so.
After considering the above questions, you are now better equipped to make an informed decision. You now have clearer insight as to what you are getting yourself into. Buying a property through lease options has its benefits and risk, although generally it is a good strategy for buyers and investors alike to grab a good deal in the real estate market.
Lease option is an innovative strategy to real estate ownership you should not miss! It’s time to make a move. Make your dream happen.