Are you thinking if you should buy that lease-to-own house? There’s no right or wrong answer to this because the answer should be dependent on your willingness or commitment to buy the house. More importantly, are you willing to accept the specific terms of the lease-to-own agreement.
To help you make a more informed choice, look at the advantages and disadvantages of renting a home with a purchase option.
The Advantages of Lease-to-Own Houses
- If you can’t afford to put down a down payment, this option could help you build up your down payment while simultaneously living in the house.
- You could get a feel of the house and the neighborhood before buying if you decide that buying is the right option for you.
- If you could get the owner to agree to the condition that you could make improvements or modifications to the house, but have the maintenance covered by the landlord, then you’re in for a great deal.
- It would be easy for you to document your timely payment history to potential lenders if you apply for a loan in the future.
The Disadvantages of Lease-to-Own Houses
- In general, lease-to-own properties come with a higher price tag. Typically, the landlord would create a lease that would include a percentage of your rent that would go towards the down payment and a portion that goes directly to him or her, explains a renowned real estate lawyer here in Denver.
- You might end up not buying the house and stuck with a lease with significant penalties because you won’t be buying the home.
- If you’re looking to buy the lease-to-own house using an FHA loan, take note that the FHA limits how much of your rent you could use for your down payment.
If you found a property that you think is perfect for you, but don’t want to purchase it right away, speak with the landlord for a possible lease-to-own deal. You just need to ensure that he or she is willing to compromise on the conditions of the lease agreement.