lease to own

Mike: I'm assuming your agent wrote up the contract three years ago, before you took possession of the property as tenants. You probably also gave your landlord a "consideration" (non-refundable deposit of $1 or more) in exchange for the option to purchase the property at a pre-determined price at a later date.

With the "Rent to Own" or "Lease with Option to Purchase" once the Leasee (Tenant, that's you!) decides to exercise the option to purchase the property from the Leasor (Landlord/Current Property Owner), The Leasee would notify the Landlord in writing that you intend on exercising your option to purchase the property. Refer to your copy of the contract; it should tell you what the requirements are to exercise your purchase option. Usually you need to notify the Landlord is writing.

Banks/Lenders will use your rental payment history over the past 12 to 24 months in lieu of a mortgage payment history for "lease option" purchases for mortgage qualification, along with your income and asset information.

As far as the mortgage loan is concerned, you can certainly go to your local bank or credit union or any lending institution that you are comfortable working with. If you have lower credit scores you may need some help from a professional that specializes in hard-to-place loans.

You may want to consider hiring a "Mortgage Broker" who can help place your loan with one of several lenders that would be able to handle this type of purchase-loan transaction. A Mortgage Broker will be paid a fee for services; however that particular type of mortgage professional will be able to do the research for you and save you countless hours and help you decide which loan programs suits your goals and financial situation best.

View my profile if you would like to contact me for more information.

Chances are the Agent that created the lease paperwork worked on behalf of the Seller.

Bring your paperwork to a Mortgage Professional and have them decipher it for you. It should clearly spell out how much credit you should have.

What is the purchase price? Is it current market value? Who determines that?
Your appraisal or theirs?

I just wrote an article this morning on snags with the Lease Option.
http://www.patagoniafinance.com/2007/07/lease-option-to-buy-snag.html


View my profile if you would like to contact me for more information.

Hello ~

A few things you may find helpful is that depending on the loan program - the lender will use current market value versus the sales value - which means that if the home appreciated 20% in the last 3 years, you will be able to apply for the loan with 20% equity - this sometimes comes in handy especially when dealing with bruised credit.

Fannie Mae and Freddie Mac also have some great programs that are not necessarily credit score driven but look primarily at your recent credit history. Also great for lower income.

Let me know if you have more questions!!

definitly take a look to make sure that there is equity in the home. VA loans are assumable and you do not have to be a veteran to assume the loan. The veteran won't be able to use their VA eligibility again until you sell the home or refinance the loan. this could be a savings for you depending on what the rate is on the current mortgage, and obviously there would be no closing costs since you are buying the home for what is owed on it. Other than that the other suggestions are very good.