How does the Lease Purchase Agreements Work

A lease-purchase agreement is an alternative way of buying or selling a home in Atlanta, Georgia. Lease purchases help buyers seeking to qualify for a mortgage, and help sellers get a decent deal in a competitive market. Specific lease-purchase agreements can differ in detail, but the basic framework commonly used.

 

Identification

A lease to purchase agreement is a lease to a home that provides an option for the renter to buy the house during the lease term. The contract stipulates the home purchase price, and the renter charges an initial fee in return for the buying option. The lease portion of the agreement will last from one to three years, and the renter can exercise the option of purchasing during the lease at any time. The renter has exclusive rights to buy the home during the lease period, cannot sell it to another party.

 

Function

In specific lease-purchasing arrangements, a part of each leasing charge gets paid for the house's purchase. Accumulated rental credits plus the original loan will constitute a substantial down payment on the house if the renter chooses the right to buying. If the occupants want not to purchase a home, this money is forfeited and held by the owner of the property.

 

Potential

A lease-purchase home in Atlanta option is a possible path for a purchaser who does not currently have enough money to make a down payment, but will do so in the next few years, or for a purchaser who has credit issues that will clear up at the same time. Any increase in the value of the home during the rental period also applies to the purchaser, allowing the equity to be built before the actual purchase.

 

Considerations

The buyer would need financing to exercise the purchasing right and complete the transaction, usually via a conventional mortgage. The renter/buyer must have the potential to apply for the mortgage or find an alternate source of financing at any potential to apply for a mortgage or find an alternative source of financing at any point during the lease period. The lease-purchase agreement may also get amended to allow the renter to pass the purchase right to a third party. Through this ability, by selling the buying option to someone who wants to buy the house, the renter could realize some benefit in the home value.

 

Warning

There is no standardization or oversight of the lease to purchase real estate contracts. The renter should understand all of the contract's specifics relating to timely rent payments and how to exercise the buying option. The renter may also want to have the agreement reviewed by the attorney before signing.