Sometimes you are ready to buy a home, but your level of credit and financial savings isn’t quite at the stage of being able to qualify for a traditional mortgage. For individuals in this situation, there is an alternative called a Lease option or “rent to own”.
In this scenario, you are leasing the property (renting) with an option to buy the house at the end of the leasing agreement for a specific price. Although the costs involved are higher than purchasing a home, this is a helpful step for new home owners that are looking to get settled into their dream home and lock in a home value while they upgrade their credit enough to qualify for a mortgage.
The first step to any agreement, should be to decide if the lease option is right for you and your family. Many factors should be considered, primarily your budget, but also the desire to purchase that specific house. Another very important factor that needs to be considered is will you be able to qualify for a loan at the end of the lease period. If your credit is very poor, you should consider getting credit help to guarantee your credit will be cleared by the time your lease option is fulfilled.
Lease option is no different than purchasing a home. You still should have the home inspected, and follow all the procedures you would if you were buying the house. After all, that is your intent in a few years anyways. Home insurance is also recommended in Lease Options. You have to treat this as your home from day one, even though it might be several years before it is legally yours.