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Answers (6)
Not only do you need to have a real estate attorney draw the actual promissory note and terms up, you should make sure that the terms are within the limits of the state.. Example some states only allow for a one year lease to purchase option.
On the sellers side you want to make sure the buyer, since not credit driven, has a stake in the game. ( a down payment ).. If they have nothing to lose, why would they keep up the property or bother with payments.
- Thomas Hall, "Tennessee Loans"
- Contributions:381
If you are on the buying side you'll need to understand how the lender looks at your monthly payment. Only that portion that exceeds the fair market rent can be credited or considered as downpayment. If you aren't financing the purchase now due to credit you need to be proactive in improving your credit situation. Contact a mortgage professional to get advice on what you will need to qualify for financing. But understand that the advice is based on current lending guidelines and not guidelines in effect 1-3 years down the road when you choose to exercise the option.
- Sean Mallett, "Exceptional Results"
- Contributions:19
Phil, check out this Rent vs Buy calculator, it's an awesome and tool.
http://www.nytimes.com/interactive/business/buy-rent-calculator.html
Let me know if you have any questions.
http://www.nytimes.com/interactive/business/buy-rent-calculator.html
Let me know if you have any questions.
- Sarah Bond, "Sarah Bond 1"
- Contributions:131
I would suggest contacting a real estate attorney and have them draw up a contract with terms you both agree with.
- Celia Butler Home Loan Diva, "At Academy Mortgage"
- Contributions:359
You asked "what should be included"
Everything.
Absolutely every little item because in writing if its not on that signed document it doesn't exist. Do addendums if you have any conversations that change the terms in any way whatsoever. Also please please document each payment with a personal check / or on line transfer and make sure the check is a consistent amount. Documentation is huge and imperative.
Recently I did a transaction and the buyer was smart enough to write into the contract of 2 years ago - "Sales price is $200,000 OR appraised value at the time of purchase whichever is lower." Saved him a real headache.
Sincerely,
Celia
Everything.
Absolutely every little item because in writing if its not on that signed document it doesn't exist. Do addendums if you have any conversations that change the terms in any way whatsoever. Also please please document each payment with a personal check / or on line transfer and make sure the check is a consistent amount. Documentation is huge and imperative.
Recently I did a transaction and the buyer was smart enough to write into the contract of 2 years ago - "Sales price is $200,000 OR appraised value at the time of purchase whichever is lower." Saved him a real headache.
Sincerely,
Celia
- sunnyview
- Contributions:25139
If you are on the buyer side, the main pro is being able to buy without having to qualify for a mortgage. If you are a buyer, the main cons are paying too much since the purchase price may be determined later, having liens stack up on the property or doing repairs that you never get money back for if you fail to complete the sale.
No one should buy a rent or lease to own without a tight contract. The one page store bought form will not cut it since rent to own is much more complex than a straight one time purchase. Make sure the terms are defined and clear as a bell or you run the very real risk of paying to own and getting nothing in the end.
No one should buy a rent or lease to own without a tight contract. The one page store bought form will not cut it since rent to own is much more complex than a straight one time purchase. Make sure the terms are defined and clear as a bell or you run the very real risk of paying to own and getting nothing in the end.
want to know the pros and cons of rent to own/ lease purchase option. what should be included?
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