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I want a lease to own property

How do I get into a lease to own property. 
  • February 06 2014 - South Louisville
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Answers (5)

I haven't seen one in ten years....
  • February 06 2014
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You get into one by presenting yourself as someone with a handful of money and bad credit.

Typically, the seller will take your pile of dough - they typically want 10% up front as a non-refundable "deposit," and they'll charge you a rent that's 10-25% above market. When the option period expires, they're betting that you won't qualify for a loan, and off you go, without your deposit, and without the money paid over and above the rent.

Now, if you separate the two transactions, and just lease, you'll only need key money to get into the place, and if you are credit-challenged, when your credit heals, you can go get a loan and buy whatever place you can afford.

Which sounds better to you? Lease-to-own, or lease first and own later?

All the best,
  • February 06 2014
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I agree with the others, lease to own can be a slippery slope.  Depending on how the contract is written, you can really lose a ton of money if for ANY reason you cannot follow through to closing.  Most sellers will require at least 20% down, and at 2- 3x the current interest rate of a lending institution.  There will also most likely be a balloon payment or a refinance stipulation within 5 years or less.  And of course, the biggest hurdle; finding a seller to actually offer a lease to own purchase.  Unless there is a reason why their property won't be approved for financing (such as a older manufactured home, or a home in great disrepair), then the picking's will be slim to none. 

The good news ... lender's have loosened their belts just a little.  There are wonderful new programs out there.  My advice is before you go looking for a homeowner carry or lease to own, check out a couple of mortgage brokers and see if they can steer you on the path to becoming a home owner on your own. 

Best of luck to you!!
  • February 06 2014
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Profile picture for wetdawgs
I agree with the other poster.   Lease to own is a great way to lose a lot of money, very few actual close.

Plan on:

A 5 to 30% non-refundable down payment (up to the owner)
Monthly rent higher than fair market value, only the difference goes to purchase.
Lose all your money if you can't qualify at the price and time agreed in the original contract.

  • February 06 2014
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Hi,

I just wanted to express my opinion about lease to own homes. Lease to own usually favors the owner. First of all, there are few homes even listed as lease to owns, so your selection is limited. Also you will be expected to pay over and above the usual rent. Remember all that money will be forfeited if you do not buy the home for any reason (if you can't buy at the end of the lease term because let's say you can't qualify for a mortgage, etc. you lose all of that money!)  I would say you should rent while you're working on raising your credit score/saving up for a down payment and then buy when you are ready...

Either way, good luck!
  • February 06 2014
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