Lou Costa
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4 years ago
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How does lease-to-buy or rent-to-own work? Is it basically paying rent and then I live there enough years and then I own it?

I could probably get a mortgage and purchase something now, but are there advantages to doing the "rent-to-own" structure? Or should I just buy something if I can?
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marc mcgee
marc mcgee
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4 years ago
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This takes on a number of forms - you could be talking about 'rent with option to purchase'. First, there is the next-to-useless. This is where a tenant rents in a jurisdiction such as Washington, DC where all tenants have a 'right of first refusal' for the property they rent if the owner tries to sell it. Renting with an option is useful for the tenant when the pre-determined price is good - and will remain good when it is exercised (hard to predict) and as a 'forced savings plan' for the renter where a portion of the rent they must pay is applied towards a possible downpayment (purchase price) with monies they might not be able to otherwise save up. Here, renting with option may have a small benefit in terms of applying a (small) portion of the rent towards a downpayment, but the price may be pre-determined and, in a falling market, this works against the tenant.

There are very few sensible opportunities for a true "lease to buy" because, since your rent would only be partially used towards the purchase price and, since your rent would very roughly equal the carrying costs of the owner, it would take you 20+ years (maybe 30+ years) of renting to pay enough to own, so who wouldn't just go get a mortgage and pay considerably less?

So, 19 times out of 20 (or more), buy something if you can.
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4 years ago
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The people interested in rent-to-own would be those who now have enough income to buy a house but who can't get a mortgage because of bad credit.

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3 years ago
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I'm not a realtor, but I did have a different and more positive experience with lease-to-buy. We rented in the Boston suburbs, and when we told the landlord we'd buy it if he ever wanted to sell it, he asked us to pay extra per month so his mortgage payments would be covered. We signed an agreement so that the "extra" accumulated as part of our down payment and the price was locked in. When we finally sold our house in Boston, we purchased the house from him as planned. It was a win-win for both of us, because the landlord covered his costs in a depressed market, and we locked in the price while prices were low. In light of our success story, I would assume that the merits of a lease-to-buy depend on the details.
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3 years ago
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Dianna, I am glad you had a good experience with lease/option. Could I have your permission to include your response on a flyer or our website which is under construction?

Thank you,
Gene
gsrealestate75@gmail.com

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L.  Wilson
L. Wilson
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3 years ago
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Either option works and it would depend on your current situation as to which one is best for you. You also need a reputable seller who is willing to sign a contract and go through a closing with a title company or attorney. You can learn more at http://lil-luvs-home-solutions.com

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1 year ago
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Cathy Hue
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1 year ago
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Well not exactly, actually when you go for a lease to own home, you make an agreement to live in the home on rent for a short duration say 1-3 years, with an option to buy it any time during rent duration or at the end of it.

But before you start with rent to own, you need to pay option money which is 1-5% of the purchase price and a slightly high monthly rental. Beauty of this agreement is that, when you decide to buy the house, this option money and part of you monthly rental becomes part of your down-payment. Read more about it here, http://www.homestarsearch.com/rent-to-own-introduction

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1 year ago
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