Some of the things you will want to know about these finance documents is that you have three of them due to the different laws in each state. You want to become knowledgeable about the process for options to purchase, lease options and lease purchase agreements when dealing with the seller of a residential property.
As the buyer you will want to negotiate an agreement to purchase the home at a later date, for the purchase price or market value which can be for up to 3 years from the date of the rent lease option.
This may be an attractive alternative because the monthly rental payments will apply towards the final purchase price. Plus no one else can try and buy the house during the option period, since there is no obligation for the buyer to buy the agreement can expire once the time is up.
Only the money put up as a down payment known as option money is not refundable if you as the home-buyer change your mind. It is best to hire a real estate attorney to learn your rights as well as get the correct format of the necessary documents and paperwork.
It still is necessary to have a home inspection which may include a pest inspection, roof certification and a home warranty plan of the property. Similarly you may want to get an appraisal and examine the title policy along with the sellers disclosures.
The benefits of a lease purchase agreement for buyers is that if it is a hard to sell property you can get a good deal and save on the home price. It also will be easier to qualify since the down payment amount is small.
Building a down payment through the rental payments insures that you will have enough to purchase the property at then end of the lease option agreement almost similar to a savings plan.
Some of the downsides of this type of method to benefit as a homeowner is that you must still qualify with your credit score, employment income and savings amount. Also if you default you are unable to recover the money you have already spent and you can not assign the option to a third party.
The option money to secure the contract can be as little as $1,000 up to $5,000 which is a much easier way to buy a home considering the strict rules for most mortgage loans.
You will have the right to occupy the residence while making monthly rental payments during this time you can buy the home at the agreed upon date.