Home Buying in Placentia>Question Details

Stephanie Za…, Home Buyer in Diamond Bar, CA

Need help! First time homebuyer? Looking in to lease to own option. I need someone's guidance desperately!!???

Asked by Stephanie Zamora, Diamond Bar, CA Fri Apr 8, 2011

Boyfriend and I are sick of renting and now that he is in medical school and I am working towards my master's we want to buy. We have been told it would be extremely difficult to buy period but were told about rent to own. Looking for as much help as we can get and if we have a shot. Thanks so much in advance!


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Hi Stephanie!

You are both young and upwardly mobile. Buying a small place now will get you equity and a rental in the future when you move on to your true dream home. I don't know what the income picture is but good credit is half the battle. Maybe you have a possible co-signer?

There are many "First Time Buyer" loan programs out there with as little a 1% down. There is always FHA with 3.5% down ... some of which can be a gift. I can refer you to an excellent, proven lender who specializes in these types of loans.

DO NOT get involved with a lease Option which is what you are talking about. First of all, you have to put up "Option money" ... you are buying the right to purchase this property down the line. This is released to the seller and is not refundable if you do not excercise the option. Typically, $5 -10,000. This goes toward your downpayment if the deal closes.

Part of your monthly rent on the property is credited to your downpayment. Everything is negotiable between the parties, of course, but I have never heard of a transaction where the full rent was credited.

A lease option is typically for a one, maybe two, year term. You must be certain that you will be ready to buy by then .... if you are not, you will lose the option money. At the time you enter into an option agreement, you fix the price and the terms of the purchase. You have no idea at this point what value OR INTEREST RATES will be in one to two years .... but you will be locked in. You will have to qualify and buy the property on the terms you have negotiated now ... or lose the option money.

Someone is always unhappy and upset in a Lease-Option sale. In a declining market .... the Buyer does not want to do the deal as negotiated. In an appreciating market, the Seller wants out. A Lease Option is a lawsuit (or arbitration) waiting to happen. Most people now feel that our market prices are on their way up ... but nobody knows for sure and how long it is going to take. Only that it will eventually happen as the market slowly recovers.

Most Agents I know, including myself, would never get involved in a lease Option! Be careful! Look into other ways of buying ! Continuing to rent for now is a better alternative than a Lease-Option.

Marlene Prescott
Prudential California Realy
714 283-6643
0 votes Thank Flag Link Fri Apr 8, 2011
Do NOT do a lease option or rent to own, it's not a good idea for you. It is for the seller but not you. You have to put up option money that is non-refundable should you not exercise the option to buy at the price you agree on today.

If you cannot buy right now for whatever reason, just get into a new lease & put a clause in there stating that YOU have the First Right of Refusal should the owner wish to sell. i.e. you get first dibs.

Do you know for sure that you cannot qualify for a loan to purchase something now? There are programs out there where you can buy for as little as a Half a percent down so long as your FICO scores are higher than 580.

If you'd like to speak to me about this, please feel free to email or call me anytime. You can also search the MLS just like I do at the web link below.

562-430-3053 cell
Realtor Since 1996
1 vote Thank Flag Link Fri Apr 8, 2011

As the homeowner who purchased a rent-to-own home noted - it's a needle in a haystack AND why would you limit your home buying options? Get yourself in a position to buy a normal home and PICK the home you really want - not the few that are available through rent-to-own options.

Usually these programs are done by investors who are looking to make some nice profits with contracts that usually favor themselves over you. Get a Real Estate Attorney to help IF you find a rent-to-own property you like to review any contracts before signing.

0 votes Thank Flag Link Sun Jul 15, 2012
I have to disagree. I was able to get into a rent to own with zero down. granted it is a needle in the haystack and your interest rate is a bit higher and your financing for more that the value of the home. However, they have worked for me just as a bank would-they pay the home insurance, they pay the property tax and my monthly payment is fixed (fixed rate). I am very grateful that I was ready to do this. The house does have its flaws, but most everything was done by verbal agreement-new roof, new plumbing, then written out by their lawyer and I get a payment breakdown to show my balloon interest loan-which is fine-either way-30 yrs is 30 yrs whether they wanna divy up the interest beginning, end or throughout. I know I fell in love with the house the day I saw it and knew I was raising my kids in this house-so 30 yr loan was no problem. I have everything I wanted and needed on my list-except the walk in closets and stuck with a single car rather than a double car garage, but I still love this house a year later and think about my home improvements all the time. Per my arraingment-after the 30 yrs, they sign over the title and the house is mine free and clear. So dont think they are not out there, because they are and you find them sometimes when it sounds to good to be true. Honest people are hard to come by these days....patience and common sense will guide you! :) Best of luck!
0 votes Thank Flag Link Sun Jul 15, 2012
Hello Stephanie,
My congratulations to you and your boyfriend, who are seeking higher education, which will pay off in the future.
I do not get involved in Leases with Option to Buy; however, my opinion is, that you lease for one year, save as much money as you can, see if you really like the property and the neighborhood (extremely important), then, talk to the landlord before your lease renewal, let him/her know of your interest to purchase the property, if the landlord agrees, have a clause in the new lease contract that you have the First Right of Refusal.
There are several issues to discuss with you, please feel free to call me 714-931-1502 or email lolaq@earthlink.net
Lola Quevedo
0 votes Thank Flag Link Sun Apr 10, 2011
Getting a lease-to-own is somewhat like looking for a needle in a haystack, but it can be done. It just has to work for both parties. You need a seller who doesn't need all his cash immediately, and you need a buyer with a plan to get regular financing within a reasonable period of time.

I wrote a blog post about this a few years ago that explains the basics and some of the risks for both parties. Read the post, then contact me with any questions : http://livelakeforest.com/2007/11/lease-option-lease-own/

0 votes Thank Flag Link Fri Apr 8, 2011
Hello Stephanie,
Instead of going back and forth on here. Please send me an email and I'll get in contact with you, in regards to your future endeavor. I will go over some options after hearing more of your current situation.

Thank you
Web Reference: http://www.chrissuh.com
0 votes Thank Flag Link Fri Apr 8, 2011
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