Since the housing bust a few years ago, lenders have toughened up their lending guidelines. These strict guidelines are making it harder to qualify for a mortgage, which makes buying a home very difficult. A lease with purchase option is a good alternative for anyone looking to buy a home, with or without excellent credit. Understanding what this purchase option is and what it involves will help you make an informed decision.
What Is A Lease With Purchase Option?
Renters usually sign a lease when renting a property. The lease lays out the terms and conditions of the rental, including what is permissible on the property and what is not. The lease protects both the owner and the renter from a legal standpoint.
A lease with purchase option includes all the typical rental protections, with one major addition. The arrangement comes with an option to purchase the property at the end of the lease period. Most lease with purchase option agreements are set at 12 months, with the purchase price of the property set when the lease is signed.
How Does A Lease With Purchase Option Work?
The terms of a lease with purchase option can vary for a number of reasons. To keep it simple, let’s look at the terms that are typically part of a lease with purchase option from IPS Amarillo.
To get a lease with purchase option, a renter can do one of three things. They can pay an upfront fee, which locks in the purchase option and lowers the monthly payment. A renter may decide to pay the full monthly payment and have part of it go to the option fee. If the renter chooses the fee, it will be applied as a closing credit at the end of the lease. Lastly, a renter might choose not to pay an option fee at all.
In addition to the option fee, a portion of the monthly rental payment will also be applied towards the closing cost. For every month’s rent paid, a credit of $350 is applied towards the closing. A 12-month lease would accrue a $4200 credit, which would happen whether or not the renter decides to pay the option fee. Let’s say the monthly rent on a home is $1500 and you pay a $3600 upfront fee. That amount reduces your monthly rent by $300 ($3600/12). If you decide to purchase at the end of the lease, you would have a total of $7800 to be applied at the closing.
IPS Amarillo In Amarillo Texas
IPS Amarillo’s lease with purchase option is perfect for people that don’t want to lose all their investments to rent, yet are not quite ready to commit to a mortgage. If you choose to pay the option fee, it will reduce your monthly payment. If you don’t want to pay the option fee, you will get a monthly credit towards your home purchase. Learn more about our Lease Options today!
We have many Available Properties in Amarillo and the surrounding area. For more information about the homes we offer, give us a call at (806) 220-6816 or Contact Us via email. You can also visit us in person at 5701 Time Square Blvd. #340 in Amarillo, Texas.