It is the dream of every adult to own a home. Owning your own home saves you money, gives you stability, and can even be a source of income. The biggest obstacle people face when it comes to home ownership is a lack of funds and a credit profile. For such people, a lease-to-buy option is one of the best ways to get their dream home. In this article, we will discuss what a lease-option is. We will also highlight six questions to consider before committing to this option.
What is a Lease-Option?
A lease-option is an agreement between a landlord and tenant allowing the tenant to buy the property after a certain period. The tenant pays an upfront option and a stipulated amount every month. The monthly payment is part of the eventual down payment for the property. A lease option forms a contract with details, including the period, option fee’s value, and the monthly payment.
If a tenant changes their mind about purchasing the house, they must forfeit the option fee and monthly payments. Lease-option is also referred to as lease-to-buy option, rent-option, and rent-to-own agreement.
Six Questions to Ask About A Lease-Option
Asking these questions before entering a rent-to-own agreement will ensure you get the best deal.
How Is the Arrangement Structured?
You must be clear on the terms of the contract before entering an agreement. Make sure to agree on the details like time and cost with the landlord before signing your lease-option contract. It is best to consult a real estate agent Campbelltown to help you agree on favorable terms.
What Is Your Plan For Purchase?
Before entering a lease-option agreement, it is crucial to have a plan for purchase. Speak to a mortgage lender before signing the contract to ensure you qualify for a loan. In addition to this, ensure to improve your credit score during the period of the lease.
What Is The House Market Like?
The area in which the house is located should be considered when entering a lease-option agreement. This will help you to decide whether to agree on a fixed price at the start of the lease or to get an appraisal at the end of the lease period. Take a survey of the housing area and see what the market is like. If the prices of homes are going up, then it is best to agree on a fixed price beforehand. If the prices are falling, it is best to wait until the end of the lease period.
Who Handles Utility Bill?
It is essential to decide who handles the home’s maintenance in terms of utilities and repairs. This will help you to avoid problems in the future.
Is An Home Inspection Needed?
An inspection is essential before signing the lease-option agreement. By doing this, you can confirm that the house has no defects.
Have I Explored Other Options?
You should consider all your options before committing to a lease-to-buy option. Consider your finances and long-term plan when making a decision. Make sure you love the house before agreeing to any arrangement. See other options on the website eXp.
As stated above, it is important to ask these questions to prevent finding yourself in a tough situation or confusion in the agreement.