subject: Everything You Ever Wanted to Learn About Lease-to-Own Contract [print this page] Everything You Ever Wanted to Learn About Lease-to-Own Contract
A lease to own contract is a contract that you make when purchasing a house. It puts the condition of taking the house on lease and completing the payment within 3 years of the purchase. What you pay is the agreed upon price (no interests are added). In order to pay the purchase price, the borrower initially pays around 1% to 5% of the total purchase price, the monthly rent and the purchase premium. All this is credited to the main price at which the house is to be purchased. In case, the borrower fails to pay the total price within the time limit confirmed, he loses all this paid money and has to move out from the house.
Features of the Contract:
The contract encompasses the period of the payment. In most of the cases, the buyers prefer having an extended time for payment; this is so because they need time to make the payments slowly. However, this could result in a risk and disadvantage for them if they are unable to make the complete payments by the end of the fixed time period. This is how they lose all the money that they have paid during this time as option fee and rent premium.
The sale-price of the house and the rent depends on the market price. However, even in this case the buyers may be at disadvantage as they are not aware of the market prices as much as the sellers are.
This deal is a possible win-win because the sellers keep getting the monthly payments, that make them believe that there house will be sold one day or even if it doesn't they can use the rent and option payments as income. On the other hand the buyers keep paying with anticipation of owning the house one day.
