How does a lease purchase agreement work for buying a home?
A lease/purchase option contract is contract that states that you have the right to buy the property at the end of the lease (or sooner) at the terms agreed upon at the beginning of the lease period. Generally, this term is about 1 year. A lease option usually gets a person comfortable with the property – does everything work etc. Secondly, it allows the buyer to save for the down payment or improve on credit to get qualified for the home loan. There are a few lenders that still allow a buyer to use the appraised price (at the end of the lease period) in the calculation of the loan to value. This is being phased out because housing prices have leveled off. What you will need to do is make sure the sales price of the condo is in line with the market. You are NOT obligated to buy the condo at the end of the period, you just HAVE the option. Look at other condos in the area for value etc. Talk with a mortgage professional and see if you could buy the condo at the end of the lease option a
