What is a Lease Option?
A Lease Option is a great way for a potential home buyer to purchase a home but needs a little extra time to obtain funds or qualify for a conventional mortgage.
A Lease Option combines a standard lease contract with an Option to buy at a later date, allowing a prospective buyer to purchase a home at market value today, versus in the future. All Lease Option details are negotiated up front and the buyer will be pre-qualified through an accepted mortgage professional to ensure their ability to purchase at the end of the contract period.
A typical lease contract will include: purchase price, amount of rent determined by a rental analysis, a rent premium, an up front lease purchase fee (which is applied towards buyers down payment at the time of closing), and a timeline to purchase agreement. The buyer will then pay a monthly agreed upon rent amount and a portion of that is a rent credit, which is credited towards the down payment or purchase price. The lease option period is determined by both buyer and seller but is commonly within a 2-5 year period. If buyer chooses not to exercise the lease option at the end of it’s term, the buyer will forfeit all rent premiums paid during the contract period as well as the lease option fee that was paid up front.
Example:
Let’s say we have an agreed purchase price of $200,000 with a 2 year option to buy, here’s how it looks.
$200,000 Purchase Price
$7500 Non-refundable Option Fee
$300/month rent credit (forced savings)
Call or Email us to learn more about this alternative solution and how we may be able to help you buy or sell your home.
For available properties please visit www.LeaseOptionsNW.com!
