Renting a house with the option to purchase can also be referred to as rent-to-own or lease-to-own. Normally, the tenant signals a 12- or 24-month agreement with the property owner. During this time period, the renter repairs his credit so, when the initial time is over he can obtain a mortgage for the remainder of the “option,” or purchase price, of their property. If a property is leased with the option to purchase, a portion of the rent every month along with the downpayment is put toward the purchase price.
Save enough money to pay for the downpayment or “alternative payment.” The option payment is a deposit that is paid into the property owner when the lease-to-own agreement is signed. In general, the alternative payment is applied to the purchase price.
Seek out properties that are offered as lease-to-own or rent-with-option. Rent-to-own properties could be advertised at real estate books, newspapers and online. Choose a property with monthly payments that will fit in your budget. Choose a property with monthly payments that do not exceed 25 percent of the monthly net income.
Meet with the real estate owner and also discuss the conditions of the rent-with-option agreement. Fully understand the conditions of the agreement and also the requirements of the property owner before entering into a lease-to-own agreement.
Complete the required application and provide the property owner with the financial advice, references, salary documentation along with any other information she might need. Await the choice of the property owner. The property owner will notify you about her choice. When the application is accepted, you should be shown a contract detailing the terms of the agreement. Don’t enter a rent-to-own agreement simply based on a verbal agreement.
Take the contract to an attorney who provides real estate services. Permit the attorney to assess the terms of the contract for any underlying issues. Make sure that you know the proportion of rent each month that will be applied to the purchase price.
Meet with a mortgage lender to go over the conditions of the contract. Be sure you’ll be able to qualify for a mortgage once the lease period has expired.
Schedule a consultation with the real estate owner to accept the conditions and sign the contract. Meet with the real estate owner, preferably with your attorney, and sign the contract. Make sure that you receive a copy of the contract.
Pay the property owner the option payment and the first rent payment, according to the contract. Receive a receipt and track all of your payments going forward.
Move into the property. Pay the entire rent on time every month. During the lease period, take steps to repair any credit issues and build decent credit. You will have to apply for a mortgage when your lease period is up.
Apply for a mortgage at least three months before the expiration date of the lease period. Because you’ve already paid a downpayment together with additional funds toward the purchase price from the monthly rent, mortgage companies and banks will often view your program in a positive light.
Secure your mortgage and close on the house when your lease period expires.