What are lease option or lease to own agreements?
A lease option agreement is both a lease that allows you to occupy the home and an option that allows you to purchase the home in the future at an agreed-upon price. A typical lease option agreement requires you to pay a somewhat higher monthly rent for the home and obligates the owner to credit a portion of that rent toward your down payment. For example, if the owner’s expected market rent were $1,500 per month, he or she might increase that to $1,800 per month and apply $300 per month to your down payment. After one year, you would have a down payment credit of $3,600. A formal contract is a must A lease option agreement should be formalized in a written contract that specifies the monthly rent, the amount of rent that will be credited to the down payment, the sales price and the expiration date of the option. Any contingencies (for example, your right to obtain a home inspection) or other important terms of the agreement should be stated in the contract as well. A lease option allo
