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A guide to lease-to-own arrangements
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Homebuying Book
This recently published article takes an in-depth look at lease-to-own arrangements.
For sellers, these deals may be a good way to get a guaranteed buyer (or almost guaranteed) for their home along with a long-term renter with the attitude of a homeowner who will take special care of the property.
For buyers, lease-to-own arrangements can work (sometimes) as a way to hang onto a desirable home while building a better credit history or saving money for a down payment.
For both sides, working with a lawyer experienced with lease-to-own arrangements, or, at the very least, an experienced real estate agent, is critical. Both sides need to be protected and treated fairly by the arrangement. All the details of the rental period and the sale need to be worked out in writing. Most important, buyers need to know that lenders will only accept as a down payment or credit toward the purchase of the home money that is paid over and above the market rent. So visiting a lender at the beginning of a lease-to-own arrangement can be a valuable hour or so to learn what a lender will expect at the end of the lease period.
For more information on lease-to-own or other possibilities on the road to homeownership, buy "HOMEBUYING: Tough Times, First Time, Any Time".
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