Asked by Brad, Oregon • Sat Feb 7, 2009
I'm confused about the lease option. I have a rental home and have had the same tenant in it for a number of years. They aren't in a situation where they would easily be able to come up with the down payment to purchase the home by regular sale, but I would like to help them do so if I could. So I have been trying to look into the lease option. What I have gathered is that I contract with them to a lease (as they have already been in) but with an option to buy the house at the end of a certain lease term. So, if they pay $1000/month in rent, they might pay $1000/month PLUS a lease option fee of $500/month for example. By the end of the pre-determined lease period they must exercise the Option. When they do so, any money they have paid can go towards their down payment? Is that correct? I have also read that the option funds don't go toward the down payment, but go towards lowering the agreed upon cost of the house. Are either of these correct? Thank you!
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