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Buying Your Home
How to Buy
Lease
Options
- What is a lease option?
- Where do I get information on lease
options?
- How do lease options work and what are the
benefits?
- What is a lease option?
When a renter signs a lease with an option to purchase the property for a
specific price within a certain time frame, that is called a lease option. In most
lease-option situations, a portion of the rent is applied to a future down payment.
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Lease options are most popular among buyers who don't have
enough funds for a down payment and closing costs.
- Where do I get
information on lease options?
For information
on lease options, "How Lease Options Benefit Realty Buyers, Sellers, Agents and
Investors" is available for from Tribune Media Services, 435 N Michigan #1500,
Chicago IL 60611. 1-800-245-6536,or "Publication House", Burlingram CA.
1-800-736-1736.
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- How do lease options work
and what are the benefits?
Most lease-option
agreements specify that a portion of the rent on the property in question is applied
toward the purchase if the option is exercised. This is referred to as rent credit.
Institutional lenders accept rent credits as part of the down payment if rental payments
exceed the market rent and if a valid lease-purchase agreement is in effect, a copy of
which must be attached to the loan application.
For sellers, lease options give them several advantages,
especially in a slow market. These include a monthly rent higher than market rent,
top-market value for the property and tax-free use of the option consideration until the
option expires or is exercised. Also, the renter is more likely to treat the property like
an owner, tax-free use of option consideration until the option expires or is exercised.
Lease-options should be read carefully for details on
transferring the option and other important concerns.
For more information, get a copy of "How Lease- Options
Benefit Realty Buyers, Sellers, Agents and Investors," available for $4 from Tribune
Media Services, 64 E. Concord St., Orlando, FL 32801.
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Last modified Saturday, June 14, 2008 |
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