BEST ANSWER
Mickey,
Work with a real estate attorney to draw your papers.
A few things to consider about lease option (not in particular order):
#1. Check with a lender to see how long it might take for you to improve credit scores, tradelines, down payment, job histories, debt to income ratio, etc. before you can obtain a mortgage.
#2. If possible, ask for the option to be renewable just in case you will need more time to qualify for mortgage or the lender's program might change then.
#3. Pay your rent through an escrow company who will distribute the money among your landlord's mortgages, insurance, property tax, homeowner association, etc. This way you can prevent your landlord default on any of above.
#4. Ask for authorizations from your landlord to get information about his / her mortgage information. Be careful if it is already defaulted or if there is adjustable rates. You want to make sure your rents are enough to cover the mortgage payments.
#5. Record the option with your real estate records office. This could prevent your landlord selling the property to others while you have the option to purchase.
#6. Do a title search to see if there are any liens on the property.
#7. Escrow the deed. In case the seller passes away or disappears when you ready to buy, having a deed in escrow will be easier than trying to find the persons with interests in the property.
#8. Make sure you know the lease terms. If you breach the lease, you could lose your option.
#9. Get a property inspection to see if there are any defects.
#10. Look for comparables or get an appraisal to see if the price you are purchasing (in a few years) seems reasonable.
Good luck!
Celine
Fri May 15 2009, 23:25
Fair Housing and Equal Opportunity