Lease Option Q&A: Is this a Good Buying Option?
Lease option may sound like a miracle of financing at first, but understand some of the pros and cons will help you decide if this type of lease is right for you. For some, especially those who are a hair away from financing for a loan, lease option is a great way to get the house they want. For other, lease option is a trap for your money and your time.
What is Lease Option?
A lease option basically means that you’re renting at the moment, but in the future, you’re planning to buy the house. At the moment the lease begins, the price of the house is locked into stone, meaning that when you do plan to buy the house, you won’t have to pay exorbitant prices. Normally, though, there is some upfront sort of “down payment” to make the lease option part of your contract. Understand, though, that a seller will be hesitant to provide a lease option in a fast real estate market. This option normally only occurs when a seller is having a hard time getting rid of a house.
What can the Risks Be?
A lease option seems like a good way to secure a house that you can’t necessarily pay for at the time. This is exactly what many renters think when they choose the lease option. Unfortunately, though, most lease options never come to fruition. Why? Many renters expect they will be able to qualify for a loan once the lease is up. Unfortunately, this rarely happens. Thus, only choose lease option if you are on the brink of qualifying for a loan, but are only two cents short. Those who have a while until they can qualify should work on improving their credit or saving money instead.
What are the Benefits of Lease option?
Lease option is perfect for those who are certain that they’ll be able to buy the house later down the road. Lease option can also be played to the buyer’s advantage as the market turns. It’s not unheard of for buyers to sit on a house until the market turns, taking advantage of the earlier agreed on price. Then, a buyer can sell the home in the inflated market and make some money. But only the crafty and those gifted in real estate will be able to make this sort of dealing a sure-fire way to make some money.
Is Lease option Right For Me?
The trick to deciding whether or not lease option is right for you is to look at your circumstance. Will you really be able to pay for your home when the time comes? Or will you simply be out the money you invested in the lease option choice? This might be a good choice if you’re interested in a crafty real estate move, though.