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60033 : Real Estate Advice

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Mon Jan 14, 2008
answered:
Andrea, a lease option is a possibility, but I think you may be better off continuing to rent. A lease option can be a good way to get into a home if you are confident that you will be able to qualify for a mortgage in the next few years (when the option comes due and you exercise it by getting a mortgage and buying the home). That means you will use the time to clean up your credit and save a down payment. Lease options can be structured so that part of the rent goes toward the down payment, but you have to be able to show that the rental is based on market rents, and only the amount above market rents can be used toward the down payment. This means your payment will likely be higher than it is now.

Another thing to consider is the total cost of owning a home. This includes the principal and interest on your mortgage payment, the property taxes, home owners insurance, an association fee if you are in a condo or town home, as well as utilities repairs and maintenence. Chances are this will come out well above the rental you are paying now.

There are a lot of other reasons to own a home, but it might be smart to take your time and regroup now. Down the road you may be in a better position to buy.
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