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Lease with Option to Buy
| | A Lease purchase contract (aka lease option contract) combines a basic lease (rental) contract with an option to purchase contract. The tenant/buyer pays to the landlord/seller a nonrefundable option deposit that is applied to the purchase price of the home at agreement completion. The tenant/buyer then pays to the landlord/seller a typical monthly rental sum. Anytime during, or at the end of the lease period, the tenant/buyer has exclusive right to buy the home under the terms to which both parties have previously agreed. | | 
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Buyer Advantages
Most option buyers are individuals who have one or more of the following: - › Negative credit activity such as bankruptcy, divorce, medical bills, lost job, etc.
- › A new job without sufficient employment history to qualify for a loan
- › Haven't saved a down payment sufficient to qualify for a loan
When these situations arise, it can be difficult to get a mortgage. However, often these issues can be overcome with time. A lease option gives an individual the time to repair poor credit, save for the down payment, and/or gain the employment history required. Easier Pre-qualification
- › Lease option cost often lower than down payment
- › No up front closing costs and potentially none at purchase closing
- › Some or all of the option consideration credited toward final purchase
- › Sell price is locked at the beginning of the agreement
- › More time to qualify for a mortgage
- › Typical options are for 12-24 Months
- › Quick move-in time
- › No taxes or insurance to pay during lease period (except for renter's insurance)
- › Portion of lease payment may go toward down payment / closing costs
- › Ability to clean up credit issues and prove stability
- › Profit from appreciation in the value of the home
- › Take pride in home ownership and let your rent build toward complete ownership
Why Consider a Lease Purchase
- › Allows time to clean up past credit issues while money goes toward a purchase
- › Builds stable payment history
- › Convenient way to save a down payment while living in the home you want to purchase
- › You are self-employed and lack the 2 years to qualify for a loan
- › You need to move now and close later
| Here is an example of how it works:
Address: 123 Special Place, Raleigh, NC
Sales Price | $135,000 | 24 Month Option Fee | $5,000 | Lease Payment | $1,100 |
The $5000.00 Option Fee gives you the exclusive right to purchase 123 Special Place for $135,000 anytime within 24 months. The $5,000.00 Option Fee is applied back to the purchase price of the property at the time you get your mortgage.
In this example, you would have 24 months to acquire a mortgage on this home. We would also reward on-time monthly payments by giving you an additional $125.00 for each month your lease payment is received by the 5th of the month. This could give you an additional $3000.00 to apply towards the purchase price or closing costs at closing.
If you pay on time all 24 months, this example would give you $8000.00 towards your home purchase. However, if you decide not to purchase the home within the 24 month option period you would forfeit all of your option consideration. Therefore, you need to be sure that you want AND can reasonably expect to buy the home prior to the end of the option period. Please call Harrison Realty Group if you would like to discuss the advantages of the Lease - Purchase option.
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