Lease to purchase agreements are a type of legal contract between tenants and landlords. This contract is known as rent to own,where the tenant rents the property for some time, with the end goal being to purchase it. This guide will walk you through the pros and cons of the lease to purchase agreements so you can decide if it is the right decision for you.
Choosing a lease to purchase agreement comes with several benefits. The most significant advantage it offers is saving money for the final down payment by renting for some time. Doing this also gives you time to build up your credit score. Depending on the contract, maintenance may split between landlord and tenant, taking some of the responsibility off your shoulders. Lease to purchase agreements also gives you a chance to experience living at the property before buying it.
However, there are a few aspects to be aware of regarding lease to purchase agreements. If you decide not to buy the property at the end of the leasing period, you are forfeiting the down payment. You also lose any option fees included, which maintain exclusive rights to buy the property. A good credit score is a must for a lease to purchase agreement, since it could prevent you from getting a mortgage.
Overall, lease to purchase agreements can be a great option in many cases. If you aim to save money or build up equity, it can be a great choice before buying a property. However, if something prevents you from purchasing the property in the end, you will end up wasting money in the long run.
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At DaMore Law, education is an integral part of what we do. We walk you through what you’re buying, and the processes involved so you can have peace of mind for significant decisions. Contact us today to learn more about how we can help you with buying your next property.