When you want to buy a home but your credit or other circumstances just aren’t quite right yet, you may want to look for a house with a lease to own option to get you started down the path of home ownership. You would still be leasing, or renting, the home, but you would have the option to purchase it and would have a contract to that effect. One of the biggest concerns is how to find lease to own homes, because they’re not advertised through real estate companies nearly as often as homes that are for sale in the standard way, and many property management companies that rent homes don’t offer lease options on those properties. Here are five steps you can take to look for a lease to own home.
1). Can your real estate agent help you?
The first person to talk to is your real estate agent. Although most agents don’t deal with lease to own options very often, they do sometimes have one listed or know of one that’s for sale. They may also know of some owners who would consider a lease with option, even if they don’t have their listing currently set up that way. It’s something to consider, and if you aren’t sure where to start that can be a good place. Your agent also knows many other agents and a lot of other people in the local area, so they can put the word out about what you’re looking for. The perfect lease to own house for you could be nearby, and your agent just needs to ask around.
2). How much of a down payment do you have?
When you’re buying a home in the traditional way you have to meet the down payment guidelines set out by your lender and the type of loan you’re getting. That might be a no money down USDA loan, 3.5% down on an FHA loan, or 5, 10, or even 20% down on a traditional mortgage. No matter which one you choose, though, you generally can find loans that offer small down payments and good interest rates, as long as you have a good credit score and can show that you can qualify to pay the mortgage. With a lease to own option, though, you may need a b down payment to show that you’re serious about making your purchase when the lease period is up. Sometimes you can get in with very little money down, but that’s not the case for a lot of lease to own agreements.
3). Are there For Sale By Owner homes in your desired neighborhood?
There are many ways to find a lease to own home, but you’ll want to make sure you read the contract carefully and that you know exactly what you’re signing. Since the purchase of a home is so significant, you want to get the right one for the right terms. If there are homes that are For Sale By Owner (FSBO) and you’re interested in buying one of them, you might want to talk to the owner about a lease with option to buy. Some owners are receptive to that, and they’ll work with you because they want to get their home sold. Especially if they need to move soon for work or other reasons, talking to them about what you’re looking for can mean a great opportunity for both of you. Just be sure you actually draw up a good clear contract, and you may want to use an attorney in order to be sure both you and the seller are protected properly.
4). How long do you want the lease to be?
When you find a lease to own home you may have some room for negotiation as to the length of the lease. You can work with the seller on that, in order to make sure you both agree to everything. Some owners will lease the home for as long as two or three years, to give a buyer the chance to correct their credit or deal with other issues that might be stopping them from buying. Be sure you talk to any owner you’re considering leasing from, in order to understand the true terms of the lease. Then you won’t be signing something that doesn’t really work for you.
5). Have you talked to local investors?
Local investors are a good source of lease to own options. A lot of investors buy homes and flip them, and some buy homes to fix up and rent out. Among all of those investors, you’ll find people who will lease you a home that you can purchase at a later date. Even if a particular investor doesn’t work that way, they likely know other investors and people in the local area who might be ready and willing to help you. That can be an excellent lead for you, and a great way of finding a home that you can lease to own and really love for a long time. With the right price and terms, you’ll have a wonderful home and you can feel a great sense of belonging in your new place.
2 Point Highlight
When you want to buy a home but your credit or other circumstances just aren’t quite right yet, you may want to look for a house with a lease to own option to get you started down the path of home ownership.
There are many ways to find a lease to own home, but you’ll want to make sure you read the contract carefully and that you know exactly what you’re signing.
