Lease options are increasingly popular with purchasers looking for an alternative way to buy a house. Lease option agreements provide the best of renting and buying. They give tenants the right to purchase the rented property without having to go through the traditional home buying process up front. While the tenant is living in the home and paying the higher rental rates, they are establishing good credit, building savings and amassing a down payment.
Although there are much potential to benefit from a Lease Option, both from the potential buyer and seller, parties must consider the risks. For example, the seller must accept a greater risk since the buyer-tenant has the right to terminate the lease at any time, even if the appraised value is lower than the purchase price. Furthermore, buyers must be aware that the purchase price is likely to be higher because of the rent premiums. Also, a lease option agreement does not bind the seller to sell the property and can conceivably loss out the rental premiums and face a potentially bad tenant with certain financial losses.
A Lease Option should be considered only after long, hard thinking by both parties, weigh out all the benefits and drawbacks of the agreement. To ensure safety, all parties should take the initiative to have the agreement fully prepared and reviewed by an attorney or contract lawyer and obtain written notification of all negotiations, repair costs, and payment amounts before signing an agreement.
In conclusion, Lease Options are a good way to purchase a house without dealing with the traditional loan process. They provide flexibility for both the buyer and seller, who need the time to build their credit or make a larger down payment, although caution is advised for both parties. Before signing a Lease Option agreement, it is important for both parties to research the laws of their state and find an experienced attorney to review and explain the agreement.
Although there are much potential to benefit from a Lease Option, both from the potential buyer and seller, parties must consider the risks. For example, the seller must accept a greater risk since the buyer-tenant has the right to terminate the lease at any time, even if the appraised value is lower than the purchase price. Furthermore, buyers must be aware that the purchase price is likely to be higher because of the rent premiums. Also, a lease option agreement does not bind the seller to sell the property and can conceivably loss out the rental premiums and face a potentially bad tenant with certain financial losses.
A Lease Option should be considered only after long, hard thinking by both parties, weigh out all the benefits and drawbacks of the agreement. To ensure safety, all parties should take the initiative to have the agreement fully prepared and reviewed by an attorney or contract lawyer and obtain written notification of all negotiations, repair costs, and payment amounts before signing an agreement.
In conclusion, Lease Options are a good way to purchase a house without dealing with the traditional loan process. They provide flexibility for both the buyer and seller, who need the time to build their credit or make a larger down payment, although caution is advised for both parties. Before signing a Lease Option agreement, it is important for both parties to research the laws of their state and find an experienced attorney to review and explain the agreement.