Rentals in Snellville>Question Details

Onelife2love, Renter in Loganville, GA

Lease Purchase vs. Rent to Own

Asked by Onelife2love, Loganville, GA Mon Jul 30, 2012

How do you qualify for a lease purchase and what is the difference between a lease purchase and rent to own?

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There is no difference, and they work well if you are leasing a tv or couch, not so much for a home. They are probably not what you expect. Be careful putting up any large sum on a rent-to-own, most buyers and sellers are under the impression whatever deal they put together will be accepted by any lender when it comes time to actually purchase a home, not true. The mortgage underwriting guidelines are very specific and an underwriter may not agree with the terms on your original lease option. You may think all or part of the rent paid goes to down payment, not necessarily how it works when it comes time to close the deal. See the link below,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Mon Jul 30, 2012
Thanks for your response
Flag Mon Jul 30, 2012
Rent to own is a term that retailers use for high interest month to month rentals of consumer goods...

A lease purchase is a bad idea, unless a buyer wants to agree to a 2012 market price, for a 2013-14 purchase.

A lease option is a nice thing to have for a tenant who LOVES their leased residence - it enables an exclusive right to purchase the property for a defined time period.

How do you qualify? What has been your experience with real estate ownership?
0 votes Thank Flag Link Mon Jul 30, 2012
Thanks for your response!
Flag Mon Jul 30, 2012
That's a great question. A lease purchase is a rental/lease contract which gives the tenant an option to purchae at the end of a term. If the tenant does not exercise that option at the end of agreed term, then it usually simply becomes a rental. Often, there is a larger deposit on the front end of the term which does not get returned if the option is not performed. A purchase is much more straight forward in that you know what the value of the property is on the front end and there are no later terms to work through.
0 votes Thank Flag Link Mon Jul 30, 2012
Thanks for your response! My credit is not great! I filed bankruptcy a year and a half ago and I have recent medical debts and smaller debts on my report for student loans. I would love to purchase a home, but I know credit wise I am not in the position to do so. I am also concerned about finding another rental with my credit history although I have a good rental history and I have a stable income. Any suggestions?
Flag Mon Jul 30, 2012
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