Which is better for a buyer: Lease to Purchase or rent while saving money / repairing credit for simple purchase? Pros / Cons for each

Asked by Dan Brassil, Saint Louis, MO Thu Jan 31, 2013

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Penny Davis’ answer
Penny Davis, Agent, St Louis, MO
Thu Jan 31, 2013
I would advise my clients to rent and save money rather than Lease Purchase. Buyers end up losing their money more often than not. Renting a place that is less expensive and saving that money every month toward the down payment seems like a better option.
1 vote
Tony Warfield, Agent, Manhattan Beach, CA
Sat Feb 2, 2013
I agree the that rent and save is usually going to be a better choice than the lease option. Unless the buyer has destroyed their credit and lease option to purchase is going to be the only way they will be able to buy a home.
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sat Feb 2, 2013
well Dan - you're an agent - what do you think?

hands down - rent while saving money and repairing credit - then buy
0 votes
Jenifer Garc…, Agent, Saint Louis, MO
Sat Feb 2, 2013
I would definitely recommend renting while saving money & working on your credit score. Best of luck!
0 votes
Patrice Emory, Agent, St Louis, MO
Sat Feb 2, 2013
Prices are increasing now so locking in a price at current levels may be smart on a lease purchase. Contracts can be structured so that part of the rent converts to earnest money --though this may cause the rent to be a little higher that it would be otherwise. If you don't perform you will have paid a premium rent for no benefit. You pay for the option. Better have an experienced agent to help with this kind of transaction.
Take action on the purchase as soon as you can so you can lock in an interest rate SOON. Rates are starting to tick up a bit.
0 votes
Klaus Illian, , Saint Louis, MO
Thu Jan 31, 2013
I'll echo what the other agents have said. You should be very careful with lease-purchase contracts. There are many ways to structure them-- and many ways that you can lose your earnest money, security deposit or rent credit. If dealing directly with a property owner, have an attorney look over the contract and make sure your interest is protected. For example, what happens to your contract if the landlord is foreclosed upon? If your credit rating is such that you can't qualify for financing on your own, and you can't get a co-signer to get you over the hump of credit repair, then a simple lease is a better option, in my opinion.

Klaus Illian
0 votes
Catie Mooney, Agent, Saint Louis, MO
Thu Jan 31, 2013
A Lease to Purchase could cost you more in the Sale Price. Lease to Own's rarely work out for one reason or another. You would be better to wait unless your circumstances warrant moving sooner. Also, there is free money for first time homebuyers. You can call me for the details on that and if you would qualify.

Catie Mooney
0 votes
Dana Tippit, Agent, Chesterfield, MO
Thu Jan 31, 2013
Lease/purchase options are somewhat rare. Sellers want/need/have to sell their property to move on...purchase another property. They need funds from that house to purchase their next one. IF such purchase option is available, it is usually more costly to the buyer...in return for the opportunity to have the property without totally purchasing. But, your funds may go toward the purchase.

Sellers may not trust payment with low/bad credit scores/foreclosure/bancruptcy.

Renting and repairing credit may therefore be the only option.

Use a buyer's agent for your best option and representation. (The seller is probably professionally represented. You should be too.)

Good luck.
0 votes
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