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Profile picture for STLMAMA4

I have bad credit and I am tired of renting, should I consider a lease purchase?

  • May 22 2014 - Saint Louis
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Answers (6)

Profile picture for sunnyview
Thanks for sharing your experience 5022. I am glad it worked out for you and I think that others would be wise to follow your good advice in having working plan to repair credit, understanding the contract and making sure that they can close the deal before putting money down on a lease to own.
  • June 02 2014
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Profile picture for user5425022
Hello,

I did have bad credit...I was a little hesitant about doing it too...however I was determine to straighten out my credit.  So we found a house we really love and fortunately did not pay a bunch of money per month...only $800....which was great and affordable for us.  

 However, I did have to put down $4000.00 up front.  I was a little struggle but we made it happen.  

Afterward, I went to a mortgage company and explain what I was trying to do.  They pulled my credit and highlighted the items I needed to clear up.  Then all winter long I declared war on my bills and paid some major ones off.  I monitored my credit closely and declared war on the collection companies to make sure they were taking paid items off my credit report.  

 No need to paid a credit correction place to repair your credit....just do it yourself and save a bunch of money!  It takes is determination and not letting collection companies to keep things on your credit that don't belong.  They will get tire of you bugging them all the time and finally take it off.

Once those Items were off...I saw my credit take major jumps and made it possible for me to get locked into a 4.25% interest rate!  Not bad for a guy with not so perfect credit!

This will allow you to qualify for a mortgage.  The only thing I would be sure of is to read your lease purchase agreement.  It may say that you have to pay all your closing cost as well and that is on top of the down payment you have to pay....if you can negotiate that before you sign paper that would be better.....your seller may be willing to pay it or split it with you.

At any rate, I'm about to close this week or next...so that should give you food for thought....its not a bad deal..you just have to be careful and make sure that you can straighten your credit out in the time allotted.  Also, don't except a deal with a monthly payment so high that you are unable to repair your credit.  

Some people who do that are counting on you not to repair your credit so that they can keep your down payment!  They know that the payment is too high for you to accomplish both...be careful!

Take care,
 
  • June 02 2014
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Profile picture for Ask Cathy
I would stay away from the lease purchase scenario. Rebuilding credit  is relatively easy but you have to be patient. It takes 18 months to 2 years to get your credit score high enough to get a decent interest rate. Keep renting pay off your bills so your debt to income ratio is low and save for your down payment. Most small banks will loan you money for a mortgage even with spotty credit if you have20% down.

Good luck
  • June 02 2014
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Profile picture for wetdawgs
Probably not.

some things to consider for lease purchase:

You will need a substantial non-refundable down payment, this is probably 5 to 30% of the market value of the property.

You will pay more than fair market rent each month, usually by about 10%.  Only the difference goes towards purchase.

If you fail to qualify for a mortgage for the agreed price and at the agreed time, you lose all the money described above and have to move.

You'll have more choice and less risk to spend a year renting and work on your credit (and down payment if necessary).
  • May 28 2014
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There are certainly benefits to a carefully put-together lease purchase. You can build equity as you live in the property. The price of the property should be established in advance. The home may be worth more than you agreed to pay and you are the winner. Your home improvements will also drive the value up and you build equity while you're renting. You'll also be able to meet your neighbors and get to know them. Lastly, you'll have the stability of a purchase price compared to instability of a rent that may change periodically. Good luck!
  • May 28 2014
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  • May 28 2014
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