Home Buying in Greenpoint>Question Details

Trulia Brook…, Other/Just Looking in Brooklyn, NY

How does a "rent with option to buy" situation work? What forms are necessary upfront?

Asked by Trulia Brooklyn, Brooklyn, NY Mon Jan 28, 2013

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Kathryn Lilly’s answer
There is not a simple answer to this question.
In New York both parties should have an attorney to draw up the contract and lease.
In a quickly recovering sales market I would think it will be very difficult to find such a transaction. A year from now who knows where sales prices will be? In a real option to buy the sales price terms etc will all be in the contract up front.
Kathryn Lilly, Broker
Realty on the Greene, LLC
0 votes Thank Flag Link Wed Jan 30, 2013
Trulia is wanting to promote the urban legent of the Rent with option to buy.

Be careful
1 vote Thank Flag Link Thu Jul 17, 2014
Rent to buy may also be called Lease to Buy; Renters pay a certain amount each month to live in the house, and at the end of an agreed upon period they have the option to buy the house. Each month of rent they pay is income for the seller, while a portion of it goes toward a down payment to eventually buy the home. Be aware that many contracts in rent-to-buy situations disallow late rental payments from counting toward an eventual sale. People with on time payment issues might lose equity when making late payments. Before you enter into this sort of arrangement talk long and hard with your real estate attorney, consider all the liabilities, and have a complete understanding of what's involved. Rent to buy can be helpful, but shouldn't be entered into by anyone who isn't serious about eventually buying the home, otherwise it will end up costing you more money in fees, and above-market rent payments.
1 vote Thank Flag Link Sat May 24, 2014
From a lenders point of you, only a portion above fair market value can be used toward a downpayment.
For example lets say Market rent your looking at is $2500 dollars. You pay $3000 dollars a month.
Only $500 dollars per month would be counted towards your down payment
Hope this answers your question
0 votes Thank Flag Link Thu Jul 17, 2014
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