Home Buying in Charlotte>Question Details

G&k Mason, Home Buyer in Charlotte

Lease Purchase/Rent to own-Good Ideal?

Asked by G&k Mason, Charlotte Sun Apr 22, 2012

Spoke we spoke with a Realtor friday that suggested we look to lease purchase/rent to own until we get our scores up as much as possible to get the best rate available. Don't no much about this option. Typical down payment (would the Home Charlotte assistance still be available), Terms (dont want to wait and interest rate go way up), how would we get a seller to except a lease purchase option when they are looking to sell there home? Where do we start

Help the community by answering this question:


Mary Petrarca’s answer
I applaude you for considering the 'seller' but you need to get your 'house' in order first.
You will lose money if you cannot close. Lease purchase means you qualify before you move in.
Contact NACA.com
They will help you put a plan together so you can move forward in the right direction. They will guarantee you the lowest rate and assign you a counselor/Realtor that knows how to help you and still work with House Charlotte.
You can own a home--just need a plan!
0 votes Thank Flag Link Sun Apr 22, 2012
This generally does not work out well... You have to find a seller willing to do it first. That is tough to do; becuase if they are selling their home they probably need the money to buy the next house. if they do not need the money they probably need that debt removed off their credit to qualify for a mortgage.

Either way, it si risky. Then they will ask you for a large down payment (which is non refundable). And you cannot use other programs while you are trying to get your score up.

My advice is to find a good mortgage broker and a Realtor who can help you through the process of getting your score up....I do this all the time with clients and have gotten each and every one of them into a house as long as they do what i ask them to do. It does not cost you anything and you can usually buy sooner rather than later.

Please feel free to give em a call ro drop me an e-mail and I would be happy to discuss your needs and what we need to do with you.

Dave diCecco
1 vote Thank Flag Link Sun Apr 22, 2012
First you need a seller who does not have to buy another home and who owns this one outright. That will eliminate the vast majority of potential homes for you. Then you have to convince him that you are a good "risk" for him and that entering into a relationship with you will eventually lead to a sale. Third, some money needs to change hands as he will have expenses he will not want to take from his own pocket (legal, taxes, brokers fee...). Do not expect to be successful if you also try to bargain on the price.
1 vote Thank Flag Link Sun Apr 22, 2012
have answers... 803 741 4240, leave message
0 votes Thank Flag Link Tue Mar 12, 2013
Not a good idea for your situation. House Charlotte is not applicable to Lease Purchases. A Lease Purchase is hardly ever a good idea for a buyer with poor credit.

ONLY Buyers with good credit, good resources, and the ability to actually purchase the property within the terms of the contract should EVER consider a Lease Purchase. More often in North Carolina we use a Lease with OPTION to Purchase. You are paying for the OPTION to purchase at a later time. But you are not actually qualifed to purchase it yet.

So why dont you just LEASE, and get your credit straight, THEN purchase later.

Too bad the interest rates in future are unknown. You don't qualify for any of them yet anyway.

Everyone wants to find a trick or quick fix to buy a house. And while it is simple for people who qualify, if you do not, and you have poor credit, then you need to FIRST FIX YOUR CREDIT, then buy a house.

With that said, I DO HELP PEOPLE WITH LEASE/PUCHASE and LEASE / OPTION contracts. I'm doing one this week on a $900k house in Ballantyne.

0 votes Thank Flag Link Mon Apr 23, 2012
I am certain you may not like what I am about to type. I agree with you that we are at more risk of rates and the prices of homes going up in the not too distant future rather than going down - negatively impacting a family’s purchasing power.

While you may be able to secure the price of a home, unfortunately; entering into a lease option to purchase does not allow you to lock in an interest rate. You will not be able to lock in an interest rate until you are ready to purchase without any contingencies. Essentially the lease to purchase is a fair option for a seller, but not a great option for a buyer. Typical lease option agreements require that a buyer pay a higher than market price of the home for the option to purchase the home in the future when the price could be more, pay a market rate of rent each month plus a portion of their down payment. The problem occurs for buyers when they are not able to obtain financing by the end of the lease to purchase option. What happens next depends on your agreement. I have seen some agreements that allow for extensions and still others that call for action to either move out and forfeit the amount of extra payments made toward the lease option to purchase or close on the home with less than favorable terms if they are even available. It would be my recommendation to take a real assessment of your situation buy attending a state sponsored first time home buyer education class and take a look at a rental that can meet your family’s needs until such time as you are ready to purchase without any contingencies. It would also recommen that you work with a FREE of charge http://www.hud.gov approved housing counselor to help you get your scores up. If you want to purchase in Charlotte I would further recommend that you contact House Charlotte at http://www.housecharlotte.net/house-charlotte for down payment and closing cost assistance. They should also offer educational options as well.

Good luck and if you have any further questions please feel free to contact me directly 757 652-5851.
0 votes Thank Flag Link Mon Apr 23, 2012
I do not share the same negativity as some of the previous posts. There are investors out there who want this. Perhaps I see it more often as I do work with investors. It is a viable way for them to profit and you to "buy time" to obtain the house. It should be structured to be a win-win. Absolutely, no one wants to waste time or money. The key is to "invest" both. You will need to make all the arrangements up front with the seller (or agent). Once agreed upon, the seller is obligated to sell to you if you meet the conditions. You are not obligated to buy but you will forfeit some money that you put toward the purchase. That is not what anyone usually wants so the key is to get it right at the beginning. And I strongly recommend having an attorney review it- it's still a binding contract.
0 votes Thank Flag Link Mon Apr 23, 2012
We are RentPurchase.Com - a full service realty company that specializes in "Lease Option Sales" we have a few locations here in Charlotte as well as offices from Rhode Island to California.

In our evaluation we would try to determine the amount of home you can afford and the time frame that it will take to engage in the lease and excersise the option. In general, we wll not put you in a home unless we can determine you can go to settlement within 18 months- 12 months is preferred. A lender is involved in our qualifying process. Longer term leases usually do not work out and the buyer loses their down payment.

For success you must be motivated to get your situation in order- if we proceed with you then the tools are available, from our company, to get you to where you need to be to qualify for a mortgage.

A home is not always available so you will have to make concessions for your home choice due to availability. While waiting, you should be working on your financial and credit situation with one of our home buyers club representatives. A jump start only increases your chances of closing sooner while rates are better!

We solicit listings that fit the lease option sale- many times we solicit homes in areas for our buyers who are approved with us and committed to the program. It's always easier for us to tell our story to the sellers when we have an approved family in our program working on themselves.

For us....lease options work out becuase we have lending, property management, credit & financial coaching as apart of our company and inhouse for our customers.

I hope this helps....wwwrentpurchase.com/premierproperties....704-777-4444
0 votes Thank Flag Link Mon Apr 23, 2012
Unfortunately, I can't advise any potential buyer looking at this option as a viable investment to homeownership, short or long term. Interest rates will more than likely maintain where they are for a long time.

The majority of savvy sellers who offer these options to the general public have positioned themselves for profit, and in today's market it is a viable investment strategy. The target in most cases are potential buyers with little to no credit with little money available for a downpayment. Statistically, those with bad credit will more than likely default again which may greatly benefit a seller of these deals. The "revolving door" affect may continue as the seller keeps the collateral (house). As potential buyers default on the obligation the cycle may continue resulting in a sizable cash flow for the seller. This is of course my opinion.

Banks have tightened lending standards for good reason. They are not and never have been in business to maintain, hold, and sell inventory. To try and ensure less default activity, the rules and standards have changed. A high credit score may indicate how responsible an individual is regarding finances. Taking a short cut to homeownership is great when you know where you are going, however, the path may also lead to a dead-end. Choose wisely. Good luck to you!
0 votes Thank Flag Link Mon Apr 23, 2012
But what if the buyer doesnt default? No revolving door. There is nothing wrong with a seller making money just like a bank would on his own property. After all the failures, which were the banks fault, people are still wanting to give your interest to the banks. Wow.
Flag Mon Apr 23, 2012
if you have a credit score of 620 or above you may qualify for 100% FINANCING in a lease purchase most sellers want a large down payment, high interest rate and in most cases in 5 years you have to do a refinancing and pay the seller of because most are not wanting to do a 30 year fixed rate
0 votes Thank Flag Link Mon Apr 23, 2012
There are tons of sellers that would do lease options, I know several very motivated and honest owners. It can be a good deal for both sides if you have a solid contract. Everyone in the industry wants you to go the conventional way of getting a broker, then a bank loan, but there are many viable options to get into a home now that banks are tightening their standards. Email me and maybe I can help you. fhco@mac.com

0 votes Thank Flag Link Mon Apr 23, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer