What is the advantage of Buying a House through Lease Purchase?

This week I must have gotten a dozen phone calls from people who wanted to purchase a home by entering into a Lease Purchase. Half of these individuals had no idea what a lease purchase is. The other half have messed up their credit a bit and just cannot buy a house outright at the moment.

So lets examine the pros and cons of entering into a Lease Purchase.

Bad news first. When you enter into a Lease Purchase you are agreeing on the purchase price. With the market continues to decline. You may be agreeing to pay more for a house than it will be worth in a year. There are ways to protect you (more on that later). Another con, if you miss a payment, you loose your deposit, which is usually about 4 times the amount of your monthly payment. Also, unlike a straight lease, you are responsible for all the maintenance on the house while you area in the lease portion of the lease purchase. And last but not least, you discover after living in the house for 3 months, that this house is a dog. You have spent thousands of dollars fixing things that are broken and you feel like you have been ripped off. At this point, why should you even consider entering into a Lease Purchase.

For starters. Once you have picked out a home, you don't have to move again. Or if you are tired of renting and just don't quite have the money to purchase a home right now. Home prices are at a all time low. Others who favor a lease purchase are those who's credit score is just a little too low to get a loan. So you find your favorite Realtor and she finds you a great home where the seller's are willing to sell the house via Lease Purchase. If you Realtor knows what he or she is doing, you will talk to a lender to get an assessment of your current credit condition and to asses how long it will be before you can go through with the purchase. If things look promising you will get together with your favorite Realtor and to draw up the agreements. There will be two documents the Lease for Lease Purchase and the Lease Purchase itself. There you will fill in all the details. These details should include special stipulations that protect you in case the house does not appraise for the agreed price and other items you would like to address. Such as the seller being responsible for maintenance during the Lease term if that is important to you.

Call your favorite realtor, Kat Vallish, to find your next home.

P. S. - If you know someone who is having trouble making their mortgage payments, give me a call at 678-468-7561

If you are a realtor writing a Lease Purchase agreement and would like to know more about writing special stipulations that protect your client, email me at katvallish@kw.com. If any of you have special stips you would like to share, please feel free.