You have probably heard about rent-to-own appliances and rent-to-own furniture, but maybe you haven’t heard about lease-to-purchase homes. In fact, you may be surprised to learn that there is such a program! In today’s post, we will take a look at some of the most frequently asked questions about lease-to-purchase homes and their answers. When you’re done reading, if this sounds like a program that might work for you, then be sure to call us today. IPS Amarillo Homes is a proud provider of homes that are available for lease-to-purchase in and around Amarillo. Contact us to see the properties that are available.
1. What is an option fee?
In the traditional process of buying a home, you need to secure a mortgage in order to finance the purchase, and in order to get a mortgage, you have to have a good credit score, as well as cash for a downpayment. If you are unable to do these things, then you may not be able to go the traditional route of becoming a homeowner. Fortunately, there is an alternative through a lease-to-purchase program. When you go this route, you will pay the seller a one-time, usually non-refundable, upfront fee that is called an option fee. This fee is what affords you the opportunity to buy the house at a future date. The option fee is frequently negotiable, as there is not a standard rate. On average, you can expect the fee to be somewhere between 2.5 and 7 percent.
2. What are the benefits of a lease-to-purchase contract?
A lease-to-purchase contract is one of the easiest, quickest, and least expensive ways to purchase or sell real estate. As a buyer, you will need to have a minimum of cash out-of-pocket, especially considering what we just shared about the option fee. The fact that you are leasing the home gives you the opportunity to live in it and see what you do or don’t like about the property and the neighborhood before you make a more solid commitment to it. As a seller, even if buyer demand is low, you are still likely to obtain a solid sales price for your home, the benefit of a non-refundable deposit, and you won’t have to worry about Realtor® fees.
3. How is lease-to-purchase different from renting?
As you probably already know, renting is the process where you pay a security deposit up-front, as well first and last month’s rent. From that point, you either pay on a month-to-month schedule, or for a contracted amount of time. Regardless of which payment plan you are on, you will not receive any long-term benefit from renting. Once you are ready to move, all of the money you spent will not be applied to a new rental or real estate purchase. With a lease-to-purchase option, however, your option fee will be applied to your down payment at the end of the agreed-upon period, should you decide to purchase the home. In addition, a portion of the rent you paid will also be credited back to you. As you can see, the long term benefits of a lease-to-purchase home are quite significant.
IPS Amarillo Homes loves helping clients be able to purchase homes who were unable to go the traditional home-buying route. If your credit score prevented you from obtaining the mortgage loan rate you needed, then contact us to see how lease-to-purchase homes could be right for you. Whether you are new to the area, or looking to move into a more permanent home, contact us today and let us show you all of the houses currently available.