Real Estate Gurus: Lease Option vs Lease Purchase?

CornMonkey · 01-22-2008, 04:31 PM

So, not that I'm going to buy a house any time soon, I am however weighing my options for when that blessed time occurs. Someone mentioned that I can look into a "lease option" or a "lease purchase" when considering a new home.

I tried a quick google search but couldn't find exactly what the difference is. Is there a difference? And is anyone familiar with the whole process?

How long are the lease terms usually?
What % of monthly lease payments can be applied to the purchase price? What's the avg %?
If/when the lease portion is over and sale can be made, is the typical downpayment still required? Does a mortgage lender handle this part?

...I have more questions, but I'll just save them for later.

TIA!

VTGreg · 01-22-2008, 07:33 PM

Is this the same thing as rent to own?

CornMonkey · 01-23-2008, 10:04 AM

In a way, yes.

Chgoman · 01-24-2008, 08:13 AM

Both terms generally refer to the same thing. Leasing a property with the option to buy it at a later date. As far as average %'s, there really is no average. Generally you pay a bit higher than the going rent rate and an amount above that is credited toward the purchase. For example, maybe you pay $100 more than the going lease rate, but they credit $150 each month toward the purchase. The owners win out by getting an extra $100 a month (non-refundable) in the even that you don't buy. You win out if you do end up buying the property by getting the extra $50 per month credit, but you loose the $100/month if you don't buy. These numbers are just examples.

A few things to think about. You should really only do this if you are really serous about buying the property, otherwise you're just flushing money down the toilet. Not only the amounts should be pre-determined, but how long do you have the option to buy (is there a deadline or is it perpetual as long as you are there), and how is the price to be determined. Is it a specific price specified now? Is it market price? If it is market price, how is it determined, realtor? Appraiser?

If you do it, make sure everything is spelled out in detail.

01-22-2008, 04:31 PM	#1
CornMonkey Rear Admiral Lower Half Join Date: May 2000 Location: in front of my computer Posts: 2,503	Real Estate Gurus: Lease Option vs Lease Purchase? So, not that I'm going to buy a house any time soon, I am however weighing my options for when that blessed time occurs. Someone mentioned that I can look into a "lease option" or a "lease purchase" when considering a new home. I tried a quick google search but couldn't find exactly what the difference is. Is there a difference? And is anyone familiar with the whole process? How long are the lease terms usually? What % of monthly lease payments can be applied to the purchase price? What's the avg %? If/when the lease portion is over and sale can be made, is the typical downpayment still required? Does a mortgage lender handle this part? ...I have more questions, but I'll just save them for later. TIA!

01-22-2008, 07:33 PM	#2
VTGreg Rear Admiral Lower Half Join Date: Jun 2002 Location: Charlotte, NC Posts: 2,533	Is this the same thing as rent to own? __________________ It only ends once... Anything that happens before that is just progress. Courage is not the absence of fear but rather the judgment that something else is more important than fear.

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01-23-2008, 10:04 AM	#3
CornMonkey Rear Admiral Lower Half Join Date: May 2000 Location: in front of my computer Posts: 2,503	In a way, yes.

01-24-2008, 08:13 AM	#4
Chgoman Lieutenant Commander Join Date: Apr 2002 Location: Mission Viejo, CA Posts: 696	Both terms generally refer to the same thing. Leasing a property with the option to buy it at a later date. As far as average %'s, there really is no average. Generally you pay a bit higher than the going rent rate and an amount above that is credited toward the purchase. For example, maybe you pay $100 more than the going lease rate, but they credit $150 each month toward the purchase. The owners win out by getting an extra $100 a month (non-refundable) in the even that you don't buy. You win out if you do end up buying the property by getting the extra $50 per month credit, but you loose the $100/month if you don't buy. These numbers are just examples. A few things to think about. You should really only do this if you are really serous about buying the property, otherwise you're just flushing money down the toilet. Not only the amounts should be pre-determined, but how long do you have the option to buy (is there a deadline or is it perpetual as long as you are there), and how is the price to be determined. Is it a specific price specified now? Is it market price? If it is market price, how is it determined, realtor? Appraiser? If you do it, make sure everything is spelled out in detail.

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